Canadian Government's Proposal to Reform Canada's Environmental Assessment and Regulatory Regime

by Bennett Jones LLP

Bennett Jones LLP

On June 29, 2017, the federal government released a discussion paper entitled "Environmental and Regulatory Reviews" ("Discussion Paper"), which proposes broad changes to the federal environmental assessment and regulatory regime, including "a comprehensive suite of changes" to the Canadian Environmental Assessment Act, 2012 ("CEAA 2012"), National Energy Board Act, Fisheries Act and Navigation Protection Act that will be drafted in the fall of 2107.

These legislative changes follow extensive government consultations and two expert reports, including "Building Common Ground: A New Vision for Impact Assessment in Canada" ("Common Grounds") released in April 2017, and "Forward, Together Enabling Canada's Clean, Safe and Secure Energy Future" ("NEB Modernization Report") released in May 2017. As discussed below, the Discussion Paper has addressed some of the concerns raised by several controversial recommendations outlined in both Expert Reports and offers a more balanced approach to the statutory and policy changes required to update the federal environmental and regulatory framework. Despite reducing the scope of the changes recommended in the Expert Reports, the current proposal will nonetheless add substantial complication, time and cost to the review of projects.

While the federal government drafts its legislative package, it will be guided by the interim principles announced in January 2016. The Discussion Paper calls for comments by August 28, 2017.

We have summarized the key changes that would affect the approval process, permitting requirements and timelines for proposed natural resource projects.

A. Project Impact Assessment

The Discussion Paper emphasizes that some elements of the current environmental assessment system are working and should continue, including:

  • a strong role for expert regulators in energy transmission, nuclear and offshore oil and gas development;
  • legislated timelines and Project List Regulations (if there are clear criteria and regular reviews and updates);
  • screening process to identify projects that do not require a full assessment;
  • decisions with enforceable conditions; and
  • tools for cooperation between federal and provincial jurisdictions.

As part of the new Impact Assessment process, the federal government will:

  • create a single agency conducting assessments independently or jointly with expert regulators subject to the final decision by the Minister(s) or Cabinet on whether the project is in the public interest;
  • introduce legislated early planning and engagement stage of the approval process;
  • focus on Indigenous peoples consultation and enhance public participation;
  • conduct strategic and regional assessments to address cumulative effects of projects, particularly those related to GHG emissions and climate change; and
  • ensure cooperation with jurisdictions, including Indigenous governments.

Single Agency and Joint Assessments

The federal government proposes to establish a single Impact Assessment Agency for conducting impact assessments (independently or jointly with expert regulators on energy transmission, nuclear and offshore oil and gas projects) and coordinating consultation with Indigenous peoples for federally designated projects. Assessment will include not only environmental, but also economic, social and health issues as well as impacts on Indigenous peoples. Success with this approach depends on the agencies having the ability to assess the other dimensions of a project, particularly the economic and other positive benefits.

Statutory Requirement for Early Planning and Engagement

The Discussion Paper states that the early planning and engagement process will be "led by proponents with clear direction from government" and will involve, among other things, direct engagement between the Crown and Indigenous peoples, and seeking public feedback on the initial list of issues to consider in an assessment. The intent is to help proponents plan what will be assessed and how they should incorporate "the interests of multiple stakeholders and consider Indigenous rights and interests". This early planning and engagement should also help set public expectations about what will be assessed and how.

Indigenous Peoples Consultation

Reconciliation of the interests of Indigenous peoples and the Crown is an overarching objective for the legislative reforms. The federal government's approach to Indigenous peoples consultation will be more comprehensive, structured and will include direct Indigenous peoples’ involvement in the impact assessment of projects.

The Discussion Paper also notes the importance of clarifying the Crown agency roles for consultation and accommodation, which was an area of concern following the Common Grounds Expert Report. It explains that the new Impact Assessment Agency will be responsible for coordination of consultation and accommodation for federally designated projects—an approach similar to the Aboriginal Consultation Office created by the Government of Alberta in 2013.

The Crown will be required to engage directly with Indigenous governments at the early planning stage of the process. The Impact Assessment process will respond to and in some cases will be based on the Indigenous knowledge, decision-making, jurisdiction and rights. Indigenous governments may lead and conduct their own assessments and share administrative authority and management responsibility of the federal government (e.g., appoint their own environmental monitors). In some cases, the federal Impact Assessment process will defer to or be harmonized with the assessment processes created by Indigenous governments. At the same time, the Discussion Paper recognizes that consensus might not be achievable, and Indigenous peoples will not have a veto over projects.

Public Participation

The Discussion Paper states that public participation will be enhanced by improved participant funding programs to "streamline applications and expand eligible activities". The experience with participant funding in other regulatory situations suggests that the funding program requires careful design and administration to achieve its goals. Given the intent to relax the interested party test (see below), the issue of participant funding increases in importance.

Other proposed changes in public participation include user-friendly public access to project information, clearer transparency requirements, clear reasons supporting decisions and explanations of how the stakeholder input was considered, and inclusive monitoring and compliance activities.

Strategic and Regional Assessments to Consider Cumulative Effects

The Discussion Paper suggests that meaningful impact assessment of an individual project requires an understanding of the "big picture" of the state of the environment regionally and nationally, including the cumulative effects of development. To achieve that goal, the new approach will allow for strategic and regional assessments. The government will also: develop and strengthen national frameworks (Pan-Canadian Framework for Clean Growth and Climate Change and Air Quality Management System); and conduct strategic assessments, starting with one for climate change, and regional environmental assessments (REA) with a focus on cumulative effects and impacts on Indigenous peoples. As an environmental assessment tool, REAs have already been implemented by the federal government in the Arctic offshore context (e.g., the Beaufort Sea REA included in the 2016 Federal Budget).

Collaboration with provincial and territorial governments will be essential to develop effective and efficient approaches to cumulative effects assessments.

Cooperation with Provincial and Indigenous Jurisdictions

In accordance with the principle of "one project, one assessment" and the focus on single, integrated impact assessment process, the federal government indicates that it will work with provincial and Indigenous governments to:

  • maintain and further develop the existing substitution process, which could be applied if the provincial or indigenous assessment process is aligned with the federal standards (as opposed to the "highest standard prevails" approach recommended in the Common Grounds Expert Report);
  • enter into specific cooperation agreements with "interested jurisdictions", which could also help plan and manage cumulative effects across jurisdictions; and
  • provide for Ministerial approval of exceptions to legislated timelines to better align assessments with other jurisdictions.

B. National Energy Board Act

The proposed changes to the National Energy Board Act focus on the Board's statutory authority and its structure. The proposed legislative changes would specifically empower the NEB to assess environment, safety, social and health issues as part of its existing "public interest" mandate and regulate offshore renewable energy projects under the federal jurisdiction. The Discussion Paper is proposing that the Board should: separate its CEO and Chair; create a corporate-style executive board; appoint separate Hearing Commissioners and enhance diversity, including Indigenous participation; and that the NEB should be maintained in Calgary (the NEB Modernization Report recommended the Board’s relocation to Ottawa). Similarly to the Impact Assessment process, the NEB framework will increase public participation and Indigenous peoples’ involvement, and will include improved funding programs and intervener capacity building, landowner advocates, alternative dispute resolution, Indigenous peoples monitoring of pipelines and other energy infrastructure.

In addition, the Discussion Paper proposes the elimination of the well-established "standing test" used by the Board. These changes would likely expand and complicate proceedings and hearings by including multiple activist groups or individuals with overlapping or conflicting interests not directly affected by the project under review.

C. Navigation Protection Act

The proposed legislation will: develop clear criteria and process for adding navigable waters to the Schedule of protected navigable waters; regulate obstructions and certain classes of works on such waters, and develop a complaint mechanism for any concerns related to unscheduled navigable waters. The criteria for the "aqueous highway test" will be clarified, and proponents will have to notify and consult with stakeholders before constructing any work on navigable waters.

Further, the amendments will incorporate the Indigenous knowledge and decision-making and allow Indigenous peoples to participate in navigable water decision-making, monitoring and enforcement activities. The government is currently identifying priority navigable waters to be added to the Schedule immediately (i.e., in advance of the proposed legislative changes).

D. Fisheries Act

As part of the proposed changes to the Fisheries Act, the government will:

  • prohibit the harmful alteration, disruption or destruction (HADD) of fish habitat without approval; clarify what authorizations are required for projects;
  • identify avoidance and mitigation measures, including through the development of standards and codes of practice; and
  • enhance its enforcement powers.

Other statutory and policy changes will focus on partnering with Indigenous peoples, planning and integrated management approach, partnering and collaboration, and providing meaningful and timely feedback to Canadians.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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