With the recently introduced Bill C-69, there are plans to radically restructure the way in which major projects, including major energy projects, are reviewed in Canada. These plans will dramatically change the Federal environmental assessment process.
When the new Liberal government took power in 2015, one of its promises was to revamp the system of environmental assessment of major projects within Federal jurisdiction in Canada. Following on that promise, the Minister of Environment and Climate Change, Catherine McKenna, introduced Bill C-69 in the House of Commons on February 8th, 2018.
Bill C-69 will radically restructure the way in which major projects, including major energy projects, are reviewed in Canada. Significant modifications will include: the introduction of new agencies, new standards by which projects in federal jurisdiction are assessed, enhanced processes for Indigenous and public participation in project reviews, and revised processes for decision making, including hard time lines for reviews to proceed and for decisions to be made.
Bill C-69 also provides for amendments to other legislation related to federal environmental assessment: the Fisheries Act will be substantially amended and a new Navigable Waters Act will be enacted. Changes to the protection and assessment processes under those Acts will be the subject of further review and updates by our firm.
Bill C-69 provides for the restructuring of two federal tribunals.
First, the Canadian Environmental Assessment Agency will be replaced with the Impact Assessment Agency of Canada (the “IAA”).
The IAA will take the lead on all federal project review. It will work with other federal agencies having a role in project review, as well as provincial regulators and Indigenous jurisdictions having an interest in major projects. At present, the lead agency is dependent on the type of project, with the Canadian Environmental Assessment Agency, the National Energy Board and the Canadian Nuclear Safety Commission each having jurisdiction to lead the review of different projects. Under the new legislation the IAA will lead all assessments with the intention of providing a single-window regulatory approach to the approval of major projects.
Bill C-69 will also create a new agency, the Canadian Energy Regulator, to replace the National Energy Board. The Canadian Energy Regulator will be headquartered in Calgary and will fulfill a similar function to that which the National Energy Board currently provides, including oversight of pipelines and power lines under federal jurisdiction, and will support the assessment by the IAA of listed energy projects (see below).
The Canadian Energy Regulator will be required to have at least one Indigenous member on its board of directors, as well as at least one Indigenous commissioner.
In conjunction with the formation of the new agencies, the National Energy Board Act and the Canadian Environmental Assessment Act will each be repealed, replaced with the Canadian Energy Regulator Act and the Impact Assessment Act, respectively.
Projects subject to Federal environmental assessment
Under existing legislation, the list of projects which are subject to federal review under the Canadian Environmental Assessment Act is set out in the Regulations Designating Physical Activities under that Act. The new regulations are similar in structure to the current regulations in that they will also provide a list of projects subject to review by the IAA, however it is expected that the list itself will be quite different, reflecting the new priorities of the government. Minister McKenna has indicated that it will be more “robust”. The government has also stated that the process for determining which types of projects will be listed will be more public and transparent.
To determine if a type of project should be listed, the Minister will solicit public input on areas of importance and concern. Following the receipt of public input, the Minister will assess whether the type of project proposed for inclusion has an impact on one or more areas of federal jurisdiction related to the environment, such as: fish and fish habitat, species at risk, federal lands, Indigenous lands, cross-border changes to the environment, and federally regulated projects such as nuclear projects and interprovincial pipelines. The nature of those adverse environmental effects will be characterized, including examining the magnitude, extent, frequency, duration and reversibility of their impact.
Following the above approach, the government will determine whether a particular project type should be listed.
The government has stated that some listed project types may still be exempt from IAA review when certain conditions are present. For example, marine terminals may be listed on the project list but exempt from review if built in conformance with a current land-use plan.
It is widely expected that the project list will include projects that have, in the past, been excluded from federal review. For example major in-situ oil sands projects and hydraulic fracking projects have, in the past, been subject to provincial environmental and project review only and not generally subject to federal review. During consultation on the new federal review process a number of participants called on the federal government to include those projects in the project list, particularly regarding the cumulative effects of those facilities and activities and their effect on Canada’s ability to meet its climate change commitments. The government has suggested that in-situ oil sands facilities may be included on the project list but excluded from review when built in a jurisdiction which has a hard cap on greenhouse gas emissions.
The development of the list of projects subject to the IAA will determine, to a large extent, how significant the changes brought about by Bill C-69 are to the federal environmental assessment process.
In addition, as the project list will be a regulation to the new legislation, future additions to and deletions from the project list will be subject to the policy priorities of future Ministers and governments. If future governments determine that their priority is to significantly expand or pare back the scope of projects on the list, then the effect of the IAA and the federal environmental assessment process will be increased or decreased accordingly.
Consultations are still ongoing as to which projects will be subject to review by the IAA.
The federal government is seeking input until April 15th on the development of the project list, and is also seeking input on how often the project list should be revised and reconsidered. For further information on the consultation process please click here.
The assessment process
For projects requiring a federal approval but which are not subject to review by the IAA as a listed project, the process for approval is expected to look much as it does today. The approval process provided by the agency having jurisdiction over the project, for example the Canadian Nuclear Safety Commission or the Canadian Energy Regulator, will continue to be followed and that agency will determine whether an approval should be granted.
For projects subject to review by the IAA, the process will look quite different. There are five essential steps to the new process.
The project proponent would submit an initial description of the project to the IAA, who will determine if it is a designated project under the regulations. If it is not, then the simpler process above will be followed.
If the project is a designated project, then the IAA will consult with other jurisdictions and with Indigenous groups to plan a single assessment process, led by the IAA. During this stage, the proponent will be expected to engage in consultation regarding the project with affected communities and Indigenous groups.
At the end of the consultation process, the IAA will determine if a full federal review is required, and determine if an impact statement is required. If an impact statement is required, the Minister will provide guidelines indicating the impacts to be considered in the environmental assessment. The impact statement guidelines will be project-specific.
The time limit set for early planning is 180 days, although the Minister has the authority to extend the early planning time limit for a further 90 days (for a total of 270 days), and cabinet may extend it indefinitely at its discretion.
The government has noted that this is the first time that early planning has been a mandatory part of the environmental assessment process, although they have also noted that early planning is a process that most proponents have already been carrying out on their own initiative.
Preparation of impact statement
Following issue by the IAA of the impact statement guidelines, the proponent will prepare a statement of the environmental, health, and other impacts of the proposed project. The IAA would accept the statement as final once it is satisfied that the criteria set out in the impact statement guidelines for that project have been addressed.
The preparation of the impact statement is to be carried out by the proponent and the government has stated that the proponent may take the time it will need to complete it, although a general deadline of three years is provided.
Following acceptance of the impact statement from the proponent, an impact assessment of the project will be carried out, taking into consideration the key elements of impact assessment listed below.
For projects under the Nuclear Safety and Control Act, the Canadian Energy Regulator Act, the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act or the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, or for projects which have been specifically designated by the Minister (expected to be major or complex projects not covered by the above acts), a review panel will carry out the impact assessment. For other projects, the IAA will carry out the impact assessment. The IAA will in all cases be responsible for leading the process and for coordinating engagement with other federal and provincial agencies and with Indigenous peoples.
Where the impact assessment is carried out by the IAA, the deadline for completion is 300 days. Where a review panel is required, the deadline is 600 days.
Factors that will be considered in the impact assessment are discussed in detail below.
For projects assessed by the IAA, once the impact assessment is complete, the Minister will determine if the project is in the public interest. The minister may instead refer the public interest decision to cabinet. For projects reviewed by a review panel, cabinet will determine if the project is in the public interest.
Ministerial decisions (including the decision to refer to cabinet) must be made within 30 days, and cabinet decisions within 90 days.
In determining whether a project is in the “public interest” as defined in the new legislation, the Minister or cabinet is required to consider:
- the extent to which the project contributes to sustainability;
- the extent of the adverse effects;
- the implementation of appropriate mitigation measures;
- the impact that the project may have on any Indigenous Group or the rights of Indigenous peoples; and
- the extent to which the effects of the project may hinder or contribute to the government’s ability to meet its environmental objectives and its commitments in respect of climate change.
The Minister has stated that the decision to retain control of project approval in the hands of the Minister or Cabinet (as opposed to delegating to experts or agencies) was a deliberate one, the Minister’s position being that the government is ultimately responsible to Canadians when making decisions on major projects in the national interest.
Reasons for decision will be made public, and would presumably include a consideration of the relationship of the project to the definition of the public interest set out in the legislation.
Following conclusion of the review process, the IAA may form Indigenous and Community Monitoring committees to ensure proponents comply with project conditions. Enforcement officers will also be appointed. In addition, life-cycle regulators (such as the Canadian Nuclear Safety Commission) will continue to monitor compliance with certificates or permits within their jurisdiction.
Key factors in impact assessment
The government has stated that it intends project review to be more rigorous and to take a big-picture look at project impacts, including the effects on the environment and a wide range of other impacts.
The impacts that will be considered will include the effect on jobs and the economy, social and health aspects, the effect on Indigenous persons and culture and the rights of Indigenous persons, mitigation measures, and gender-based analysis. The analysis will look at whether the proponent is using the best available technology and practices to reduce the impact on the environment. The analysis will also include an assessment of whether the project would positively or negatively affect Canada’s ability to meets its environmental and climate change commitments (such as under the Paris climate accord).
Reviews will be based on the principle of sustainability.
The government has stated that it intends that decisions will be guided by robust scientific information, evidence, community knowledge and Indigenous traditional knowledge. The government has also stated that in order to improve transparency, it will provide plain-language summaries of all scientific information and make plain-language summaries of decisions publicly available. In addition, the government’s Chief Science Advisor will review methods and integrity of all science.
As mentioned, each project will be assessed to determine how projects will affect men, women and gender diverse peoples. An example of such analysis will include a study of how the influx of male workers in a remote work camp could affect women living in nearby communities.
Public and Indigenous participation
The government has made it clear that early engagement with affected communities, particularly Indigenous communities, is important in the review process. When deemed necessary, significant funding will be made available to interested parties to participate in the process, particularly in impact assessment.
The government has made it clear that the meaningful participation of Indigenous persons in project reviews is important to its goal of reconciliation. In that regard, the government has committed to early and regular engagement with Indigenous communities from the start of any process, and will work in partnership with Indigenous peoples in project review. This is in addition to the content of the project reviews themselves, which will consider traditional Indigenous knowledge alongside scientific and community knowledge.
There has been significant disagreement in previous environmental assessment review panels as to who has been allowed to make submissions to and to be heard at review panels. The new process will be far less restrictive regarding the right to appear before the IAA or review panels; the government has removed restrictions on participating in the processes, and there will be few, if any, grounds on which the right to be heard in a proceeding would be denied.
Bill C-69 and the expanded scope of federal review represents a significant change to the federal environmental process in Canada, both in terms of procedural matters and in terms of the substance of the assessments. Some of the key take-aways from the new legislation include:
- The government’s firm commitment to a renewal of the relationship with Indigenous persons and the advancement of reconciliation is strongly reflected in the new process, from the involvement of Indigenous communities and persons in early consultation through to decision making, to ensuring that the effects of project development on Indigenous communities is properly addressed.
- Climate change continues to be a top priority for the government, and the effect of projects on climate change goals will be a major factor in assessments. Previously, the need for a federal assessment was most often tied to a federal “trigger” for the project, such as the crossing of a navigable waterway, while major projects with significant environmental impacts but without a federal “trigger”, such as in-situ oil sands extraction, have only been subject to provincial assessments. The government has made it clear that it intends projects with the potential for impact on Canada’s climate change goals to be the subject of a federal environmental assessment even in the absence of a “trigger” under what would be considered a traditional federal head of power.
- There has been no reaction yet from other levels of government, indicating whether they will be willing to participate in a new federal environmental assessment process. The participation of provinces in a federal process may be particularly contentious for projects that would have previously been within provincial jurisdiction. If provinces or Indigenous governments do not agree to participate in federally-led joint review processes or do not otherwise fully buy into a process led by the IAA, the intended advantages (including one-stop shopping and a process that meets the requirements of all levels of government) will not be achieved.
- The true impact of these changes is yet to be determined. Consultations are still ongoing on the preparation of regulations which will set out the scope of projects subject to the new assessment process. Until consultation is complete and the list of projects is set, the true effect of the new legislation on the public and on project proponents will not be known.
By Michael Styczen, P.Eng., and Brian Bidyk, DLA Piper