Canada: Canadian Government Proposes Significant Changes To The Environmental Assessment And Regulatory Framework

As part of the 2012 Budget Bill C-38, the Jobs, Growth and Long-term Prosperity Act, the federal government has proposed legislative changes that will significantly affect the federal environmental assessment regime (EA) and the federal environmental regulatory framework. The Bill was tabled for first reading on April 26, 2012. Should the new legislation come into force, the Canadian Environmental Assessment Act (CEAA) will be repealed and replaced with the Canadian Environmental Assessment Act, 2012 (CEAA 2012) and major amendments will be brought to the Fisheries Act, the National Energy Board Act, the Canadian Environmental Protection Act, 1999 and the Species at Risk Act.

The focus throughout these amendments was to narrow the scope of federal involvement, reduce the number of decision makers and avoid regulatory duplication. Thus, the new regulatory reform proposed by the federal government is a significant departure from the current framework.

Significant changes that may be relevant for project proponents in Canada are outlined below.

Designated project approach

A federal EA will no longer be prompted by a statutory trigger-based approach. Under CEAA 2012, a project-based approach is proposed where only projects within the class of "designated projects" listed in regulations will be subject to a federal EA. The impacts of this proposed amendment are still unclear, as the regulations describing the class of projects have not yet been released.

Reducing the number of decision makers

CEAA 2012 will also limit the number of federal authorities responsible for conducting EAs (known as Responsible Authorities or RAs) to the Canadian Environmental Assessment Agency (Agency), the National Energy Board (NEB) and the Canadian Nuclear Safety Commission (CNSC). The NEB and the CNSC will continue to be the RAs for designated projects within their mandates, and the Agency as the RA for all other designated projects.

This is a departure from the current regime where there are over 40 RAs that may be involved in the federal EA process.

Decision statement

The end product of the new EA process will be a "decision statement" issued by the RA or the federal cabinet. The decision statement may include conditions regarding mitigation measures and follow-up programs. The conditions will be enforceable and proponents are subject to penalties for non-compliance.

Under CEAA 2012, proponents of designated projects will not be able to do anything that may cause an environmental effect in connection with their designated project until either (1) the RA decides, after undertaking an environmental screening of the designated project, that no EA is required, or (2) the proponent agrees to comply with the conditions set out in the decision statement issued by the RA or the minister of environment after considering an EA study and deciding that the designated project is not likely to cause significant adverse environmental effects, or, if such effects are likely, the federal cabinet decides that they are justified.

Under the current CEAA regime, the EA process results in recommendations, relying on other regulatory permits to enforce these recommendations.

Narrowing of scope: effects to be considered

Under the proposed new federal regime, the environmental effects of a designated project to be considered will be narrower than at present, limited to those in the legislative authority of Parliament—namely effects on fish and their habitat as defined in the Fisheries Act, aquatic species as defined in the Species at Risk Act, migratory birds as defined in the Migratory Birds Convention Act, federal lands, aboriginal peoples and those effects specifically set out in a Schedule to CEAA 2012.1

Environmental effects directly linked or necessarily incidental to the RA's exercise of a duty or performance of that duty must also be considered. This is a significant change from the current CEAA approach, where all project effects are considered, including effects that fall squarely within provincial jurisdiction.

The factors to be considered under CEAA 2012 are the environmental and cumulative effects of the designated project, including:

  • effects of malfunctions and accidents;
  • the significance of the effects;
  • public comments;
  • technically and economically feasible mitigation measures;
  • the requirement for follow-up programs;
  • the purpose of the designated project;
  • the results of any regional studies;2 and
  • if the designated project is sent to a review panel, any other relevant matter that the RA requires be taken into account.

The EA no longer requires the RA to consider alternatives to, or the need for, the designated project.

Designated projects with effects on aboriginal peoples will continue to be subject to the EA process. Under CEAA 2012, the RA or the review panel must consider the effects of environmental changes on aboriginal health and socioeconomic conditions, physical and cultural heritage, the current use of lands and resources for traditional purposes, and any structure, site or thing that is of historical, archaeological, paleontological or architectural significance.

Internet site

CEAA 2012 contemplates a new website where EA decisions and documents are posted (the Internet Site). Posting of EA decisions and documents on the Internet Site will have legal consequences.

Timelines

Under CEAA 2012, certain designated projects will be automatically subject to an EA, while other designated projects will be subject, at least at first, to only a screening. Designated projects automatically subject to an EA will include designated projects regulated by the NEB or CNSC and those made subject to an EA by future regulations or ministerial order.

All other designated projects will be subject to a screening. Under a screening, the proponent will have to submit a project description to the Agency. If the Agency considers it complete, a summary of the project description is to be posted on the Internet Site and the public will then have 20 days to provide comments.3 Within 45 days of the posting, the Agency must then decide if an EA is required.

When an EA is required, the Agency will post notice of the commencement of the EA on the Internet Site. Within 365 days from the initial posting a decision statement must be issued as to whether the designated project is likely to cause significant adverse effect on federal jurisdiction. The 365-day time limit may be extended for up to three months by the minister to allow the Agency to cooperate with a province, an Indian band or a foreign government, and it may be further extended by the federal cabinet.

Within 60 days of posting the commencement of an EA on the Internet Site, the minister may, if he or she thinks it's in the public interest, refer the designated project to a review panel for a public hearing. If sent to a review panel, then within 24 months the review panel must hold public hearings and report to the minister, who must issue the decision statement. The minister may extend the timelines and may also enter into agreements with the provinces to establish joint review panels.

Public participation

Under CEAA 2012, the public will be granted an opportunity to comment on the draft EA report. A public funding program to facilitate public participation in the EA process is also planned.

For projects requiring NEB or review panel assessments, the right to participate will be limited to "interested parties," which are persons "directly affected by carrying out the designated project" or persons who have "relevant information or expertise." Determining if a person is an "interested party" will be left to the RA.

Substitution

There has been a significant expansion of the powers to substitute process under the proposed amendments. Although the potential for harmonization with provinces now exists, CEAA 2012 expands the role provincial governments can play in the federal EA process. Notably, CEAA 2012 contemplates delegating the federal EA process to provincial governments or agencies and excluding a project from the federal EA process where there is an equivalent assessment of the designated project in another jurisdiction.

The minister may also substitute a provincial EA, or one conducted by another body or jurisdiction, for an EA required under CEAA 2012 if the minister is of the opinion that the provincial or other EA process is an adequate substitute.

The minister will have an obligation to approve such a substitution where the provincial government, or an agency or body established under an Act of a provincial legislature, requests the substitution. However, the minister will have no authority to grant the substitution for designated projects reviewed by the CNSC or the NEB, or where the EA has been referred to a review panel. If the designated project is referred to a review panel, the minister may still enter into an agreement with another jurisdiction respecting the establishment of a joint review panel.

Transitional provisions

If CEAA 2012 comes into force, EAs currently progressing under the existing regime will be completed under CEAA. However, under the new regime comprehensive studies must generally be completed six months from the coming into force of CEAA 2012. In the case of a panel review or joint panel review, the minister (or the minister and the RAs) will establish time limits by which the EA must be concluded.

The Fisheries Act

Bill C-38 includes many proposed changes to the Fisheries Act. One of the most significant changes affects the habitat protection provisions. Presently it is an offence to carry on work or an undertaking that harmfully alters, disrupts or destroys fish habitat unless an authorization has been granted by the minister of Fisheries and Oceans. Under the proposed amendments, it will be an offence to carry on any work, undertaking or activity that results in serious harm to a commercial, recreational or aboriginal fishery or to fish that support such a fishery, unless the work, undertaking or activity is exempt by regulations or authorized by the minister.

Another significant change concerns pollution prevention provisions that prohibit the deposit of a deleterious substance in water frequented by fish unless allowed by regulations. Under the proposed amendments, a new exception will be created whereby the minister may make regulations authorizing the deposit of a deleterious substance in certain classes of water.

Under other proposed amendments to the Fisheries Act, the minister will be able to delegate some authorizations under the Act to other responsible authorities or provincial governments.

Offences

There is a trend in the proposed amendments towards increased enforcement measures, as the penalties will be increased and the use of administrative monetary penalties will be expanded. These changes are most evident in the Fisheries Act, the National Energy Board Act, and CEAA 2012.

Under the Fisheries Act, minimum penalties will be instituted and the maximum fines will be raised to $6 million for offences prosecuted under indictment and to $4 million for offences prosecuted by summary conviction. The mandatory minimum fine, in the case of a first offence committed by a corporation, is $500,000 for an indictable offence and $100,000 for a summary conviction offence. For a subsequent offence these minimums will be doubled. The time limit for prosecution by way of summary conviction will be extended from two to five years. The amendments also include a new "duty to notify" provision that will require a proponent to report a harmful alteration, disruption or destruction of fish habitat.

The NEB has been granted jurisdiction to establish regulations creating administrative monetary penalties for contravention of designated sections of the National Energy Board Act, or non-compliance with approvals or orders. The penalties must not exceed $25,000 for an individual and $100,000 for any other person.

Under CEAA 2012, non-compliance with the conditions in a decision statement will now be an offence enforceable with penalties of up to $400,000.

The authors wish to thank Ms. Valeria Naranjo, articling student, for her help in preparing this legal update.

Footnotes

1 The Schedule is presently blank.

2 The minister may establish a committee to conduct a study of the effects of existing or future physical activities in a region.

3 If the Agency considers the project description inadequate, the time limit clock does not start until the proponent provides the missing information.

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