Compliance and Enforcement
The goal of a compliance and enforcement program is to influence the compliance rates of regulated parties. The Ministry uses a variety of compliance and enforcement tools to gather information, obtain compliance, and deter future non-compliance, and gives consideration to the most appropriate tool necessary to obtain compliance. Compliance and enforcement tools include informal communications, formal letters (information request and/or warning), audits, inspections, administrative monetary penalties, and court prosecution.
Compliance and enforcement reporting demonstrates the Ministry's commitment to maintaining openness, transparency, and accountability. The Ministry provides online access to information related to its compliance and enforcement actions. Public reporting of compliance and enforcement activities promotes compliance with laws and regulations.
Administrative Monetary Penalties
Administrative monetary penalties are financial penalties imposed on a person or a business for non-compliance with a regulatory requirement. Administrative penalties may be an appropriate response to non-compliance where a regulated party has contravened a regulatory requirement.
There are two types of administrative monetary penalties that apply under the BC-LCFS: automatic administrative monetary penalties and imposed administrative monetary penalties.
“Automatic administrative monetary penalty” refers to non-appealable penalties that are automatically assessed when a supplier fails to comply with either the Part 2 - Renewable Fuel Requirements or the Part 3 - Low Carbon Fuel Requirements. Payment must accompany the compliance reports, which are due March 31 following each compliance period.
Renewable fuel. An automatic administrative monetary penalty must be paid if a fuel supplier fails to comply with the renewable fuel requirements. The supplier will pay a penalty based on the volume of renewable fuel that should have been supplied. The amount of the penalty is calculated by the formula:
( [Renewable fuel required] – [Renewable fuel supplied] ) × [Penalty rate]
The penalty rates are 30¢/L for a renewable content deficit in the gasoline pool and 45¢/L for a renewable content deficit in the diesel pool.
Low carbon fuel. An automatic administrative monetary penalty must be paid if a fuel supplier fails to comply with the carbon intensity limit for a given compliance period. The supplier must pay a penalty to retire debits that have not been offset by credits earned in the same compliance period. The amount of the penalty is calculated by the formula:
( [Gross debits] – [Gross credits] ) × [Penalty rate]
The penalty rate is $200/net low carbon fuel debit
“Imposed administrative monetary penalty” refers to penalties that are imposed by the statutory director for all other matters. An imposed administrative monetary penalty must be paid within 30 days from the date that the penalty is imposed. Part 3 of the Renewable & Low Carbon Fuel Requirements Regulation outlines prescribed contraventions and maximum amounts that can be imposed for a contravention, and other matters related to imposing this form of penalty.
Administrative monetary penalties are issued by a small number of Ministry staff who have delegated statutory authority under the Greenhouse Gas Reduction (Renewable & Low Carbon Fuel Requirements) Act. These are senior staff who understand the intent of the regulatory requirements as well as the principles of administrative fairness and the standards that must be met.
Section 16 of the Renewable & Low Carbon Fuel Requirements Regulation outlines various factors the statutory decision-maker must consider when determining the appropriate amount of an administrative monetary penalty. For example, in determining the amount of an administrative penalty for a failure to submit a compliance report by the date it was due, the director must consider whether the fuel supplier has previously submitted compliance reports late and how often, and any other matter the director considers relevant. Other factors the statutory decision-maker considers may include:
Impact: the seriousness of the potential or actual impact on the implementation of the Act, the integrity of the low carbon fuel credit market, and the integrity of the fuel supply market.
History: the compliance history of the fuel company, including previous instances of non-compliance and the seriousness of past non-compliance.
Factual circumstances: evidence-based assessment on whether the fuel company intended to contravene requirements, including evidence that the company was deceptive.
Due diligence: assessment on whether reasonable steps were taken by the fuel supplier to satisfy a legal requirement and the care they might be expected to exercise in the examination and evaluation of risks affecting business transactions.
Consistency: The Ministry’s enforcement efforts in similar cases of non-compliance.
What decisions may be appealed?
If the statutory decision-maker is satisfied that a fuel supplier has contravened the Greenhouse Gas Reduction (Renewable & Low Carbon Fuel Requirements) Act or the Renewable & Low Carbon Fuel Requirements Regulation, the supplier will be issued a notice of intention that indicates they will be found to be non-compliant and that one or more administrative penalties are warranted. A notice of intention provides a fuel supplier with the opportunity to be heard before a final determination is made. The fuel supplier may take this as a final opportunity to address the non-compliance and may also provide new information making a case as to why penalties are not warranted.
If the supplier fails to satisfy the statutory decision-maker that penalties are not warranted or fails to respond during the opportunity to be heard, then the statutory decision-maker will impose the penalty.
Imposed administrative monetary penalties may be appealed. Part 5 of the Greenhouse Gas Reduction (Renewable & Low Carbon Fuel Requirements) Act outlines the decisions that may be appealed, who may appeal, and the process of appeal.
An administrative monetary penalty must be made payable to the Minister of Finance. For more information please contact the Low Carbon Fuels Branch via email at email@example.com.