Canada: Federal Budget Details Changes To Federal Regulatory Process

On March 29, 2012, the Honourable Jim Flaherty, Minister of Finance, presented the 2012 Federal Budget. The Budget outlines the general principles that the federal government will adopt in implementing changes to the federal regulatory process and details several specific legislative reforms. Overall, this approach appears likely to introduce much needed efficiency and certainty into the federal regulatory process that will have positive implications for resource developers.

General Principles for Regulatory Reform

The Budget identifies the following four key areas for reforming the federal regulatory process:

  1. Making the review process for major projects more predictable and timely.
  2. Reducing duplication and regulatory burden.
  3. Strengthening environmental protection.
  4. Enhancing consultations with Aboriginal peoples.

Minister Flaherty's Budget Speech also stressed the need for a "one project, one review" approach to regulatory reviews following clearly defined time periods as well as new infrastructure to allow Canadian energy products to access new export markets.

Specific Legislative Changes

In addition to outlining the general principles that the federal government will follow in implementing regulatory reform, the following are specific and noteworthy legislative changes that are referenced in the Budget:

  • Fixed Timelines: The following mandatory timelines will be introduced for all federal environmental reviews:
    • Panel reviews: 24 months
    • National Energy Board hearings: 18 months
    • Standard environmental assessments under the Canadian Environmental Assessment Act (CEAA): 12 months
  • Equivalency of provincial environmental assessments: The Budget states that authority will be given to recognize provincial environmental assessments as substitutes for or equivalent to federal environmental assessments.
  • Aboriginal consultation funding: $13.6 million over two years will be provided to the Canadian Environmental Assessment Agency to support consultation with Aboriginal groups in relation to projects undergoing CEAA assessments. The Budget also states that Aboriginal consultation will be integrated into the regulatory review process, designated lead coordinators for Aboriginal consultation will be assigned and that Aboriginal consultation undertaken by the federal and provincial governments will be coordinated.
  • Enhanced environmental protection for oil tankers, oil and gas pipelines: New regulations will be enacted to enhance marine vessel inspections, address oil spill response and emergency preparedness, and improve navigational safety. Research will be conducted to improve scientific understanding of marine pollution risks and management response in the event of a marine oil spill. In addition, the number of inspections of oil and gas pipelines will increase by 50% and the number of audits of oil and gas pipelines will increase by 100%. The combined cost of these programs will be $49.2 million over two years.

Implications of the Changes in the Budget

While it remains to be seen precisely how the federal government will implement many of the proposed changes to the federal regulatory process, the regulatory reforms announced in the Budget appear to be a measured response by the federal government to criticism of the regulatory process. Contrary to alarms raised by some groups, the government's proposed changes to the federal regulatory system are not likely to undermine the environmental safeguards in existing federal legislation. Rather, existing regulatory processes will become more timely and efficient, duplication between regulators will be reduced, and resources will become more focused on the key environmental issues associated with proposed projects. The focus on key environmental issues will support good decision-making within reasonable time frames and these prescribed time frames will provide project proponents with greater regulatory certainty to support additional investment in the Canadian resource industry.

In addition, more regulatory oversight over marine oil shipping and oil and gas pipelines is likely to enhance existing environmental protection in these areas. In our view, these proposed legislative changes should be viewed positively by both industry and the general public. They represent a reasonable compromise that supports responsible development of Canada's resources. It will be important for resource developers to closely monitor the specific legislative reforms that are proposed in the coming weeks and months to assess how these changes will affect their particular businesses.

Shawn's practice is comprised of energy, mining, environmental, regulatory and aboriginal law matters. Sander specializes in environmental, regulatory and aboriginal law issues for natural resource development projects.

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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