Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in British Columbia, 2025: SOR/2025-37

Canada Gazette, Part II, Volume 159, Number 6

Registration
SOR/2025-37 February 26, 2025

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

P.C. 2025-162 February 25, 2025

Whereas, under subsection 332(1)footnote a of the Canadian Environmental Protection Act, 1999 footnote b, the Minister of the Environment published in the Canada Gazette, Part I, on June 29, 2024, a copy of the proposed Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in British Columbia, 2025 and persons were given an opportunity to file comments with respect to the proposed Order or to file a notice of objection requesting that a board of review be established and stating the reasons for the objection;

Whereas, on December 18, 2024, the Minister of the Environment and the Government of British Columbia entered into a written agreement referred to in subsection 10(3) of that Act to the effect that there are in force by or under the laws of British Columbia

Whereas, under subsections 10(4) and (5) of that Act, the Minister gave notice of the availability of that agreement in the Canada Gazette, Part I, on June 29, 2024, and persons were given an opportunity to file with the Minister comments or a notice of objection;

And whereas, under subsection 10(6) of that Act, the Minister published in the Canada Gazette, Part I, on December 21, 2024, a notice of availability of a report that summarizes how any comments or notices of objection were dealt with;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, makes the annexed Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in British Columbia, 2025 under subsection 10(3) of the Canadian Environmental Protection Act, 1999 footnote b.

Order Declaring that the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in British Columbia, 2025

Declaration

Non-application

1 Except with respect to a federal work or undertaking, the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) do not apply in British Columbia.

Cessation of Effect

Termination of agreement

2 This Order ceases to have effect on the day on which the agreement between the Minister of the Environment and the Government of British Columbia entitled “Agreement on the Equivalency of Federal and British Columbia Regulations Respecting the Release of Methane from the Oil and Gas Sector in British Columbia, 2025” terminates or is terminated under subsection 10(8) of the Canadian Environmental Protection Act, 1999.

Repeal

3 The Order Declaring that the Provisions of the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) Do Not Apply in British Columbia footnote 1 is repealed.

Coming into Force

Registration

4 This Order comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

The current Equivalency Agreement between the Minister of the Environment and the Province of British Columbia, which forms the basis for the non-application of the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) [the Federal Regulations]footnote 2 in the Province of British Columbia, is set to expire on March 25, 2025.

A new equivalency agreement has been negotiated. An updated Order-in-Council (the Order) is required to avoid regulatory overlap and duplicative reporting burden.

Background

In April 2018, the Government of Canada published the Federal Regulations. The Federal Regulations introduced control measures (facility and equipment standards) to reduce fugitive and venting emissions of hydrocarbons, including methane, from the upstream oil and gas sector. The Federal Regulations came into force on January 1, 2020. On December 17, 2018, the British Columbia Oil and Gas Commission approved a final amendment to the existing Drilling and Production Regulations footnote 3 under the Energy Resource Activities Act footnote 4 (the BC Regulations), which contains requirements for methane emissions reductions.

In February 2020, the Minister of the Environment entered into a five-year equivalency agreementfootnote 5 with British Columbia and an associated equivalency Order was made to declare that the Federal Regulations do not apply to the province over the period of the equivalency agreement.footnote 6 This approach reduces regulatory overlap and administrative burden. British Columbia will continue to apply its own methane emission regulations and facilities will only face one set of requirements. This equivalency agreement recognized that British Columbia’s regulations would achieve equivalent outcomes in reducing methane emissions compared to the Federal Regulations. The current equivalency agreement is in force until March 25, 2025, unless terminated earlier by either party on three months’ notice.

Modelling analysis conducted for the existing Order showedfootnote 7 the current British Columbia Regulations result in equivalent GHG emission outcomes to the Federal Regulations up to 2030. Based on this, the Government has negotiated a five-year equivalency agreement for the 2025 to 2029 period with British Columbia in order to declare the Federal Regulations do not apply to the province over the period of this equivalency agreement.

Equivalency agreements under the Canadian Environmental Protection Act, 1999 (CEPA)

Protection of the environment is a shared jurisdiction between the Government of Canada and provincial governments. Section 10 of CEPA authorizes the Governor in Council, on the recommendation of the Minister of the Environment, to make an order declaring that the provisions of a regulation made under certain subsections of CEPA do not apply in a province or territory. For this to occur, the province or territory must first enter into an equivalency agreement with the Minister of the Environment. An equivalency agreement is a written agreement entered into by the Minister of the Environment and the province or territory declaring that there are in force in the province or territory, laws containing provisions that are equivalent to the Federal Regulations, and laws containing provisions that are similar to sections 17 to 20 of CEPA for the investigation of alleged offences under laws of the province or territory. Under subsection 10(8) of CEPA, an equivalency agreement has a maximum term of five years after the date on which it comes into force. An equivalency agreement may be terminated before this time subject to a three-month notice by either party.

The Department of the Environment (the Department) has indicated that it is willing to consider developing equivalency agreements for GHG emission regulations with interested provinces and territories, in order to reduce regulatory overlap and provide greater flexibility for regulated sectors. In the case of GHG regulations, provincial or territorial laws are considered to be equivalent if they result in equivalent GHG emission outcomes, calculated in terms of carbon dioxide equivalent (CO2e). In particular, GHG emissions under provincial or territorial regulations must be no greater than they would have been if the corresponding federal regulations had applied instead. Therefore, a province or territory is expected to attain the GHG outcome that would have occurred under the federal Regulations in a way that best suits its particular circumstances.

British Columbia equivalency agreement (2025 to 2029)

The Government of Canada published a new draft equivalency agreement in the CEPA Registry and a notice of its availability was published in the Canada Gazette, Part I, on June 29, 2024, initiating a 60-day period for public comment.footnote 8 This agreement is based on expected methane emissions (in CO2e), under provisions of the provincial laws in British Columbia, and on the fact that these provincial laws contain similar provisions to sections 17 to 20 of CEPA for the investigation of alleged offences. These provisions are set out under the British Columbia Regulations. This agreement will come into force on the date of registration of the Order declaring that the Federal Regulations do not apply in British Columbia except with respect to federal works or undertakings. The agreement will be reviewed on an annual basis. The agreement institutes information sharing requirements for British Columbia that includes facility level emissions data, verification activities and enforcement measures.

The agreement will end five years after the date of its coming into force unless terminated early by either party with at least three months’ notice. Specifically, the agreement acknowledges the Regulations Amending the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) [the proposed Amendments] that were published in the Canada Gazette, Part I on December 16, 2023. If these regulations are finalized in the Canada Gazette, Part II, it will trigger an equivalency review process. Should the review show ongoing equivalent outcomes, this could form the basis of a renewed agreement and associated order. Should the review not show equivalent outcome, the Government of Canada will provide three months’ notice of termination, and the agreement will terminate on December 31, 2026. This date reflects a key coming into force date set out in the proposed Amendments, as published in December 2023.

Equivalent environmental outcomes

For the purposes of determining equivalent outcomes between the British Columbia Regulations and the Federal Regulations, the Department has estimated the methane reduction outcomes (in CO2e) from the Federal Regulations and the British Columbia Regulations using the departmental reference case as published in Canada’s Greenhouse Gas and Air Pollutant Projections: 2018.

Emission reductions were estimated in a manner similar to those described in the Regulatory Impact Analysis Statement for the Federal Regulations.footnote 6 The analysis was conducted by first developing detailed, bottom-up engineering emissions estimates for the baseline and regulatory scenarios for each emissions source, which are aligned with the departmental reference case. The departmental reference case for the oil and gas sector was determined using historical emissions from the departmental National Inventory Report (NIR) and the production and price forecast of oil and gas from the Canada Energy Regulator.

Based on these estimates, the British Columbia Regulations result in cumulative emission reductions of 5.64 megatonnes (Mt) of methane (in CO2e) for the period starting on January 1, 2025, and ending on December 31, 2029, compared to 5.25 Mt of reductions under the Federal Regulations, as summarized in Table 1 below. The British Columbia Regulations are expected to achieve higher emission reductions from pneumatic devices and surface casing vent flows, while the Federal Regulations will achieve higher reductions from the other emissions sources, ensuring that emissions reductions are achieved in a manner that best suits the province’s particular circumstances.

Table 1: Five-year comparison of cumulative methane emission reductions (Mt CO2e) from January 1, 2025, to December 31, 2029
Numbers may not add up due to rounding
Emissions source British Columbia Regulations Federal Regulations Difference
Compressors 0.43 0.63 -0.20
Fugitives 1.71 1.66 0.05
Routine venting 0.02 0.05 -0.03
Pneumatic devices 3.40 2.92 0.48
Surface casing vent flows 0.09 * 0.09
Total 5.64 5.25 0.39

Table 1 note(s)

Table 1 note *

Surface casing vent flow is captured in the routine venting requirements of the Federal Regulations.

Return to table 1 note * referrer

As illustrated in Table 2, the British Columbia Regulations were estimated to achieve higher emission reductions compared to the Federal Regulations over the five-year period from Jan 1, 2025, to Dec 31, 2029.

Table 2: Five-year comparison of methane emission reductions (Mt CO2e) from January 1, 2025, to December 31, 2029
Numbers may not add up due to rounding
Year British Columbia Regulations Federal Regulations Difference
2025 0.93 0.93 -0.01
2026 1.09 1.03 0.06
2027 1.19 1.08 0.11
2028 1.24 1.09 0.15
2029 1.30 1.11 0.19
Total 5.64 5.25 0.39

The Department expects that the trend from the modelled period ending on December 31, 2029, would continue to at least February 25, 2030, and thus the British Columbia Regulations are expected to achieve equivalent GHG emission reductions to the Federal Regulations over the five-year period of the new equivalency agreement (February 26, 2025, to February 25, 2030).

Objective

The objective of the Order is to reduce regulatory overlap and reporting burden, having established that British Columbia’s laws are expected to achieve equivalent GHG emission reductions in the oil and gas sector in a manner that best suits its particular circumstances.


Description

The Order, made pursuant to subsection 10(3) of CEPA, will suspend the application of the Federal Regulations in British Columbia with the exception of federal works or undertakings as defined in subsection 3(1) of CEPA. The Order will cease to have effect upon the termination of the equivalency agreement. The equivalency agreement has a maximum term of five years but may be terminated early by either party.

Regulatory development

Consultation

Officials from the Government of British Columbia and the Government of Canada are engaged in bilateral discussions on the renewal of the equivalency agreement. These discussions are focused on key policy and technical parameters used in support of the determination of equivalent outcomes and to ensure British Columbia has in place laws containing provisions that are similar to sections 17 to 20 of CEPA for the investigation of alleged offences under environmental legislation of the province, as well as information-sharing arrangements agreed to with British Columbia representatives allowing the conduct of annual reviews of the agreement.

Comments received during the 60-day public comment period following publication of the proposed equivalency agreement and the proposed Order in the Canada Gazette, Part I

A notice of the availability of the proposed equivalency agreement and the proposed Order were published in the Canada Gazette, Part I, on June 29, 2024. They were also posted to the Department’s CEPA Registry website to raise awareness that they were available to the public for comment. The Department also informed a targeted group of key stakeholders of the applicable comment period. The Department received four submissions in total from various stakeholders, including the oil and gas industry and industry associations, and environmental non-governmental organizations (ENGOs).

Overview of feedback received and responses to specific stakeholder feedback

The Department’s responses to all comments related to the draft agreement have been published on the CEPA Registry. Stakeholder comments and responses are summarized below.

Support for equivalency agreement

Industry stakeholders were supportive of the proposed equivalency agreement and proposed Order and expressed support for provincially led regulations in the upstream oil and gas sector. Concerns were raised regarding the possibility of duplicative regulations in the absence of an equivalency agreement. The Order has been published ahead of the expiry of the existing equivalency agreement, to ensure no duplication of regulatory requirements. While ENGOs recognize the importance of the proposed equivalency agreement in helping Canada meet its methane reduction targets, they have advocated for stronger regulatory measures, greater use of direct measurement techniques, and more public oversight to ensure these agreements are effective and transparent.

Regulatory alignment

Industry stakeholders have requested that the equivalency agreement should be aligned with the proposed federal methane amendments to avoid future deficiencies and to provide regulatory certainty. While the Department acknowledges the importance of aligning regulations where possible, it is not feasible at this time, as the final federal methane amendments have yet to be published.

However, the equivalency agreement includes a conditional reassessment provision which would be triggered following the publication of final amendments to the Federal Regulations to reassess the determination of equivalency between the federal and provincial regimes. If the provincial and federal regulatory regimes are not equivalent over the specified period, the agreement will be terminated early.

Enhanced public engagement and information sharing

ENGOs have asked that the Department encourage the provincial government to share the most recent and relevant information publicly. In particular, ENGOs sought information related to measurement-based data to improve the accuracy of estimates of methane emissions and enable the public to accurately assess the efficacy of the provincial regime in reducing methane from the oil and gas sector. ENGOs have requested enhanced public involvement in federal and provincial policy making. ENGOs would like the Department to provide greater transparency around the negotiation of a renewed agreement and any revisions to the equivalency agreement, as well as allowing the public to provide input during the Department’s annual review of the information provided by British Columbia under the agreement and to consider measurement data and compliance rates when conducting its annual review.

The equivalency agreement already goes beyond the previous equivalency agreement in this regard, and the Department seeks opportunities to work with ENGOs, through informal engagements related to the ongoing improvement of methane data, and through ongoing consultations on the proposed amendments, to make data available outside of the scope of these agreements. The Province of British Columbia publishes information related to methane emissions reduction publicly including reported and modelled methane emissions for oil and gas facilities. The equivalency agreement mandates detailed, annual data submissions on the number of facilities, methane reduction outcomes, and enforcement activities. It emphasizes transparency and ongoing evaluation of the effectiveness of both the federal and provincial regulations. This information is used to assess the implementation and effectiveness of the Province’s regulations to reduce methane emissions. Stakeholders are invited to share their observations on the annual reports with the Department.

Department’s methane emissions modelling and assumptions

Industry stakeholders have noted that the oil and gas industry has reported significant methane reductions in British Columbia. They also stated that the Department has likely underestimated the total provincial methane reductions, both from 2020 to 2025 and from 2025 to 2030.

ENGOs have requested more detail and transparency regarding the Department’s modelling and whether it reflects the results of direct measurements of the oil and gas sector’s methane emissions that were recently integrated into the NIR 2024.

ENGOs have also requested more detail regarding how the Department scales estimated emissions with the NIR, as well as the assumptions it relies on when calculating emissions reductions from the relevant requirements of the provincial regulations.

The Department determines equivalent emissions outcomes by conducting an assessment using the same modelling methodology for both the existing federal and provincial regulations. This approach involves developing detailed bottom-up emissions estimates for both sets of regulations and comparing them with Canada’s emissions baseline NIR 2018. The NIR includes detailed information related to estimated emissions projections and assumptions that the Department relies on to calculate emissions reductions.

As part of the development of the proposed Amendments, the Department has ongoing consultations with stakeholders on modelling methods. These consultations aim to refine and improve the modelling approaches, ensuring they reflect the latest data and methodologies, including provincial input and recent advancements in direct measurement techniques. The outcome of these consultations will further inform the Department’s approach to assessing methane emissions reductions and regulatory equivalency.

Modern treaty obligations and Indigenous engagement and consultation

In 2017, there were three Indigenous groups identified to whom there is a potential application of the Federal Regulations. The objective of the Order is to declare that the Federal Regulations are not applicable in British Columbia, on the basis that the British Columbia Regulations are equivalent to the Federal Regulations. Equivalent environmental outcomes are expected to be achieved under the British Columbia Regulations. No modern treaty obligations are expected to be impacted by the Order.

Instrument choice

An order is the only regulatory instrument under CEPA for the Governor in Council to declare that the Federal Regulations do not apply in British Columbia. Non-regulatory options such as a voluntary option or code of practice are therefore not suitable tools for achieving the objective.

Regulatory analysis

Benefits and costs

The British Columbia Regulations will regulate methane emissions in a manner that results in equivalent outcomes to the Federal Regulations and in a manner designed with the specific characteristics of the British Columbia oil and gas industry in mind. Furthermore, the Order reduces regulatory overlap and reporting burden by suspending the requirements of the Federal Regulations in British Columbia. Therefore, the Order is expected to result in incremental compliance and administrative cost savings to industry.

The federal government is expected to realize incremental cost savings from suspended administrative activities related to enforcement, compliance promotion, and administration of the Federal Regulations in British Columbia. These cost savings are estimated to total about $94,213 over a five-year period (2023 Canadian dollars).footnote 9

Small business lens

Given that the Order is not expected to result in incremental costs to industry, it is not expected to result in incremental cost impacts to small businesses.

One-for-one rule

The one-for-one rule will apply to the Order, constituting an “out” as per the Policy on Limiting Regulatory Burden on Business. However, those cost reductions have already been accounted for in the Regulatory Impact Analysis Statement for the previous order, which covered the 2020–2029 analytical period. Accordingly, no additional impact was assessed for the Order.

Regulatory cooperation and alignment

Protection of the environment is a shared responsibility in Canada. The use of equivalency agreements, together with an Order in Council suspending the application of a federal regulation in a jurisdiction, is included in section 10 of CEPA as a tool for avoiding regulatory duplication.

Effects on the environment

The Federal Regulations were developed under the Pan-Canadian Framework on Clean Growth and Climate Change. A strategic environmental assessment (SEA) was completed for this framework in 2016. The SEA concluded that proposals under the framework will reduce GHG emissions and are in line with the 2016–2019 Federal Sustainable Development Strategy (FSDS) (PDF) goal of effective action on climate change. A preliminary scan concluded that a SEA is not required for the Order, since they continue to align with the updated 2022–2026 FSDS to reduce emissions of methane from the oil and gas sector.

Gender-based analysis plus

No impacts based on gender and other identity factors have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

Implementation

The Order declares that the Federal Regulations do not apply in British Columbia effective on the day on which the Order comes into force, except for federal works and undertakings, which includes interprovincial pipelines.

Contacts

Magda Little
Director
Oil, Gas and Alternative Energy Division
Energy and Transportation Directorate
Environmental Protection Branch
Environment and Climate Change Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
J8Y 3Z5
Email: methane-methane@ec.gc.ca

Matthew Watkinson
Executive Director
Regulatory Analysis and Valuation Division
Economic Analysis Directorate
Strategic Policy Branch
Environment and Climate Change Canada
351 Saint-Joseph Boulevard
Gatineau, Quebec
J8Y 3Z5
Email: darv-ravd@ec.gc.ca