Canada: Ontario Modernizes Environmental Approvals To Create ‘Risk-Based’ Approach

Introduction

With the passage of the Open for Business Act, 2010 (the "OBA" or the "Act") on October 25, 2010, the province of Ontario signalled that it had begun in earnest its attempt to streamline Ontario's environmental approvals process as part of a larger initiative to enhance the delivery of government-to-business services.

In recognition of its out-dated environmental approvals regime, Schedule 7 of the OBA overhauls the current approvals process under the Environmental Protection Act ("EPA") by implementing a 'risk-based approach,' to be administered on a two-track system for environmental approvals.

Once proclaimed in force, and following the enactment of accompanying regulations, both of which are expected in the Fall of 2012, the modernized environmental approvals process is expected to allow those businesses engaged in lower-risk activities to attain their approvals in a quicker and more cost-effective manner, while simultaneously focusing limited government resources on higher-risk activities. As will be summarized below, the creation of a two-track system for environmental approvals will almost certainly enhance the approvals process for both higher-risk and lower-risk activities. Additional amendments to the EPA found in the OBA, however, will add new dimensions to both tracks in ways which will neither speed up nor slow down the registration/application process but are nonetheless of significance to those undertaking regulated activities.

Ontario's New Two-Track Approach

The goal of creating a two-track system for environmental approvals is to allocate limited Ministry of Environment ("MOE") resources to activities which pose the greatest threat to the public and the natural environment. Given that the Ministry of Environment currently receives over 6,000 requests for Certificates of Approval each year, moving to a 'risk-based' approach should allow the bulk of those requests, which pose little threat to the environment, to proceed quickly, while the more complex and potentially more harmful applications receive the attention they deserve.

Environmental Activity and Sector Registry

For lower-risk and less complex activities, which to-date still require a certificate of approval, the OBA amends the EPA and calls for the creation of the Environmental Activity and Sector Registry ("EASR"), as Part II.2 of the EPA.

The purposes of the EASR are to allow applicants to register those activities prescribed by regulation in an efficient manner, and to provide to the public the information contained in the registrations in an accessible and timely manner [EPA, s.20.20(2)].

Activities prescribed by the regulations (which have not yet been proposed by MOE) will remain prohibited until the "regulated person" has registered the activity or activities and a director, appointed by the Minister of Environment under the EPA, confirms the registration (a "Director"). Following the payment of a registration fee, the quantum of which is still to be determined, a confirmation of registration and details of the approval is then provided electronically by the Director [EPA, s.20.22(1)].

Similar to current obligations on holders of certificates of approvals, the onus remains with the person engaging in the registered activity to ensure their confirmation of registration remains up-to-date and in accordance with the regulations, as well as that the registration includes any reports, records or documents required by the Director as a condition of registration [EPA, s.20.22(2)].

In certain circumstances, such as where the confirmation of registration was made on the basis of mistaken or false information, or where the person is no longer engaging in the activity, the Director may suspend or revoke the registration [EPA, s.20.23(1)].

Certain other compliance procedures, including annual certifications of compliance by a senior manager of a registrant, and obligations to maintain insurance, are likely to be included in the revised EPA; however, details of such requirements will only be made clear following the publication of the regulations associated with the EPA amendments.

As of the date of this writing, MOE has proposed a preliminary list of activity sectors that may be prescribed by the regulations as subject to the EASR. MOE has also provided Technical Reports explaining the rationale for selecting such sectors. Currently published on the Environmental Registry as a policy proposal notice entitled, "Proposed Environmental Activity and Sector Registry Group 1 Activities and Sector Technical Reports", MOE has proposed the following four sectors for the EASR: 'automotive body, paint and interior repair and maintenance sector'; 'comfort heating in buildings' sector; 'printing sector'; and the 'standby power generation equipment in buildings' sector. The policy identifying the proposed EASR sectors was open for public comment on the Environmental Registry between January 18, 2011 to March 4, 2011, and the technical reports, outlining which specific activities within each sector would be subject to EASR registration, are also provided. Following the comment period, it is expected that MOE will draft the regulations to govern the EASR, though it remains uncertain if such regulations will be made available to the public for comment prior to coming into force.

Environmental Compliance Approvals

For activities not prescribed by the regulations as being subject to the EASR process, the new Part II.1 of the EPA, called the Environmental Compliance Approvals ("ECA") process will apply. Although requiring a more thorough and extensive application and review process, as compared with the EASR, the ECA process is still designed to be more streamlined when compared with the current certificate of approval system. One important amendment towards this goal concerns applications where applicants are either engaged in more than one activity at a site, or engaged in regulated activities at more than one site. In both cases, the new ECA process allows a single application for approval to cover the multiple activities or multiple sites – a reasonable improvement over the current system which often results in redundant oversight by MOE staff [EPA, s.20.2(5) and (6)].

While this development in the ECA process should benefit large businesses with multiple facilities or complex processes, several other elements of the ECA process, as amended by the OBA, alter, but not necessarily streamline, the approvals process.

Several amendments to the EPA grant wider power and greater discretion to the Director, without significant legislative direction on how the Director is to utilize his or her discretionary power. One of the most important new powers of the Director is that he or she is now explicitly permitted to consider "the past conduct of the holder of the approval or the applicant" and may suspend, revoke or refuse to issue an ECA if such past conduct "affords reasonable grounds to believe that the person will not engage in the activity in accordance with this Act" [EPA, s.20.7(2)]. This discretionary power will help or hinder applicants based on their track record with the Ministry of Environment.

The modernized ECA process will also grant the Director the power to require an applicant to consult with persons specified by the Director in a manner specified by the Director before the Director makes a decision on an application [EPA, s.20.9]. This discretionary power also does not contain direction for either the Director or applicant to follow, and as such, its impact on ECA timelines are not yet known.

Once an ECA is granted, the amended EPA also grants the Director the power, on his or her own initiative, to alter or revoke the terms and conditions of an ECA after it has been issued, to impose new terms and conditions or to suspend or revoke all or part of an ECA [EPA, s.20.13]. Where the Director wishes to seek the input of the Environmental Review Tribunal ("ERT") prior to making a decision on an application, he or she may do so by referring an application, or part of an application, to the ERT prior to making a decision [EPA, s.20.15(1)]. Again, what is potentially worrying to applicants is that the EPA as drafted provides no guidance as to when the Director should utilize this discretion and refer an application to the ERT. Also added to the EPA by the OBA is a new provision granting the ERT the power to award costs for its proceedings [EPA, s.20.15(7)]. The right to appeal a decision of the ERT, on a question of law, to the Divisional Court and on a question other than a question, to the Minister, has been maintained.

Conclusions

Without being able to review the proposed regulations, which will provide important detail on not only which activities will be permitted to register under the more streamlined EASR process, but also what will be required for on-going compliance with the registration system, it is difficult to fully forecast whether Ontario's amended environmental approvals process will serve businesses and the public in a more effective manner.

For businesses, there are a number of changes which should have the effect of streamlining the environmental approvals process, minimizing both the time and energy associated with either registering under the new EASR or obtaining approval under the ECA process. The EASR will no doubt offer registrants a simpler path towards compliance, thereby achieving its goal of shortening the time between when a business wants to undertake a regulated activity and when it can start doing so as an EASR registrant. For members of the public interested in accessing details on registrations, the new registry itself should also be less confusing and more accessible simply based on the fact that each business will have only one registry entry, listing their multiple activities, where applicable.

The ECA, which will still require a formal application and approval process, seems to offer some important enhancements to the current system, while striking a reasonable balance between the rights and obligations of the applicant, Director and members of the public. Under the ECA process, the most important change will be allowing a single approval to cover multiple activities and/or multiple sites used by the applicant. While such a change improves on the current system by reducing redundancy, other changes, such as increased discretionary power on the Director, will modify the approvals process, but not necessarily in ways that make it more streamlined for applicants.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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