Canada: 2012 Budget Implementation: The Ebb And Flow Of Navigable Waters

On October 18, 2012, the federal government introduced Bill C-45, the Jobs and Growth Act, 2012 (the Bill). This Bill builds upon Bill C-38, which was introduced and passed in the spring and was the subject of prior Blakes Bulletins. There are several amendments in Bill C-45 that will be of significance to businesses across the country, in particular in respect of works which are proposed for navigable waters.

Navigation Protection Act

One of Canada's oldest statutes is the Navigable Waters Protection Act (NWPA), which for more than a century has provided for protection of passage on Canada's navigable waters. The NWPA requires approval of works that are to be placed on, over or under navigable waters, with some exceptions for minor works which are set out in regulations. Under Bill C-45, the NWPA is proposed to be renamed the Navigation Protection Act (NPA) and substantially amended, with a vast majority of its provisions repealed and replaced.

The most significant aspect of the amendments to the NWPA relates to its prohibition and associated approval provisions on construction of works associated with navigable waters. The NPA will no longer prohibit works over all navigable waters, but rather, will only prohibit works on navigable waters that are listed in a Schedule to the Act, which is included in the Bill. The Schedule lists navigable waters in two categories: 1) oceans and lakes; and 2) rivers. The Schedule lists only significant bodies of water. The effect of this is that the prohibition on obstructing navigable waters will only apply to three oceans, 97 lakes and 62 rivers across Canada. Several canals are also included in the Schedule, including the Welland and Rideau canals. The federal cabinet is granted the power to amend the Schedule to add more bodies of water, provided it is in the national or regional economic interest, in the public interest, or is requested by a local authority.

The bottom line is that because the prohibition no longer applies to most navigable waters, there is also no concurrent requirement to apply for an approval if such works are being built.

The Bill does contain a provision allowing owners of works to request the NPA be made applicable to the works over waters which are not listed in the Schedule. The significance of this is discussed below.

In circumstances where works are to be built on navigable waters listed in the Schedule, the process for obtaining approvals has also been changed. If a work is included in the definition of a "minor work" in regulations, then the work can be constructed without approval, provided it complies with any conditions in the regulations in relation to that construction. In addition to regulations, works established as classes of works in the Minor Works and Waters (Navigable Waters Protection Act) Order are deemed to be "minor works" for the purposes of the NPA.

For those projects that are not minor works, the process for obtaining approvals includes a notice of proposed work to the Minister, after which there is a determination by the Minister of whether the work will substantially interfere with navigation. If the work will not substantially interfere with navigation, then no approval is required and construction can move forward in accordance with regulations. For works that will substantially interfere with navigation, an approval is required and the NPA sets out the steps to be followed in obtaining this approval.

The powers given to the Minister under the NPA include the power to:

  • refuse to issue an approval if he or she considers that the refusal is in the public interest
  • attach any term or condition that he or she considers appropriate to an approval, including requirements for owners to give security – the NPA includes a positive obligation to comply with any terms included in an approval
  • authorize construction of works in emergencies
  • order removal or alteration of unauthorized works
  • order removal or alteration of existing works which interfere with navigation more than they did when constructed, or which are likely to cause a serious and imminent danger to navigation, or if the removal is in the public interest
  • order removal of obstructions in navigable waters listed in the Schedule – there is also a duty upon persons in charge of obstructions to report the existence of an obstruction and to place signal lights on them.

Another provision of note in the NPA is a prohibition on dewatering of navigable waters. "Dewatering" is not defined. This prohibition is not restricted to only those navigable waters listed in the Schedule but will apply to any navigable waters throughout Canada. There is a provision which allows the Governor in Council to order an exemption from the prohibition if such an exemption would be in the public interest. However, there is no approval power granted to the Minister in respect of such dewatering. This may prove problematic for major industries which currently use substantial amounts of water for their business. It also raises a question as to the intersection with provincial water laws which provide licences for water use.

The current NWPA contains a prohibition on throwing or depositing stone, gravel, earth, cinders, ashes or other materials or rubbish liable to sink to the bottom of any water. This prohibition will be amended to be limited to waters where the minimum depth is less than 36 metres. The Bill clarifies that this prohibition shall not be construed as to permit throwing or depositing of substances in any part of a navigable water if it is prohibited under another federal act.

As with many new statutory provisions, the federal government has been given the power to create administrative monetary penalties (AMPs) for violations of the NPA, to a maximum amount of C$40,000 per day. AMPs must be paid once a notice of violation has been provided, subject to a right to have the proposed penalty reviewed by a tribunal.

The new NPA contains an interesting provision with respect to due diligence in relation to AMPs. It states that a person shall not be liable for a violation if they establish they exercised due diligence. The use of the word "liable" is unusual in relation to regulatory infractions. One interpretation may be that the drafters intended that due diligence will not answer the question of whether a person is "guilty" of the violation, but whether the person is liable to pay the penalty. If this is the intended interpretation, it is a deviation from the manner in which due diligence is applied by the courts in Canada and does not follow the formula set out by the Supreme Court of Canada in R. v. Sault Ste.-Marie,in that it does not appear to provide a full defence to the alleged violation. If this is indeed the case, when an entity can prove it was duly diligent, it will not have to pay the penalty, although it will still have a record of a violation which may be relevant at a future date if there are further problems.

There are also co-ordinating amendments to Bill C-38 which clarify that power lines regulated under the National Energy Board Act (NEBA) are not works to which the NPA applies.

If passed, the NPA will come into force on a day to be fixed by an order from the federal cabinet.

Commentary

Some commentators have suggested that the NPA will no longer apply to all navigable waters. This is not actually accurate, in that there are a number of provisions in it which regulate activities impacting navigable waters, including the requirement discussed above that navigable waters not be dewatered. What has changed is the application of the approval requirements, and in this respect, the amendments are consistent with other recent amendments to regulatory legislation in Canada, in that the federal government has been taking itself out of the approvals business. It is noted also that the NPA allows the government to expand the list of navigable waters for which there must be approvals.

Other commentators have suggested the amendments to the NWPA, in essence, mean it is no longer an act that protects the environment. In reality, the NWPA is not, and has never been, a statute which provided for protection of the aquatic environment; rather, it provides for protection of navigation, over which the federal government has exclusive authority under Canada's constitution. However, due to the manner in which the Canadian Environmental Assessment Act, 1992 (CEAA 1992) was structured, there was a link between NWPA approvals and environmental protection. This is because under the CEAA 1992, any approval to be issued under the NWPA triggered a federal environmental assessment, which was required to be carried out by the authority issuing the NWPA approval – but the approval itself related to navigation, not the environment. If CEAA 1992 had not recently been repealed, then it would be accurate to state that the proposed revisions to the NWPA potentially reduces federal government protection of the environment of navigable waters. However, as NWPA approvals have already been removed as a trigger for environmental assessment, the narrowing of the scope of approvals required for works on navigable waters in the revised NPA does not have specific environmental implications – that already occurred when CEAA 1992 was repealed and replaced with a new environmental assessment regime earlier this year under Bill C-38. It is also noted that the amendments to the NWPA in Bill C-45 do not affect other federal or provincial regimes which provide protection of the aquatic environment.

A question arises as to the potential implications of the change to the NWPA to public rights of navigation. There is a common law right in Canada to navigate waters, but this right can be limited if the works impeding navigation are clearly authorized by statute. The removal of approval of works on navigable waters for a substantial number of bodies of water in Canada raises the potential that works will be built which may impede navigation but which are not approved by statute. While many such works may be constructed pursuant to other regulatory regimes, such as those regulating forestry or pipelines, it is not necessarily a given that this will provide the necessary defence to a civil allegation of interference with a right to navigation. As a result, the removal of the need for an approval to build works on navigable waters may, in some cases, result in greater conflicts between users of rivers and builders of the works. This may explain the clause in the NPA which allows builders of works on navigable waters other than those listed in the Schedule, to request approvals, even though they are not required.

Another potential impact of the changes to the NWPA could be on consultation with Canada's Aboriginal Peoples. Currently, the obligation to consult is triggered by a decision being made by the Crown which could impact the rights of Aboriginal Peoples. As federal approvals will not be needed for most navigable waters under the NPA, absent some other form of required approvals (such as under the Fisheries Act), the duty to consult may not arise when works impeding navigation are proposed.

The Fisheries Act

Bill C-45 makes some minor changes to the current version of the Fisheries Act. Most significant of these is a provision which requires that all fines received by the Receiver General after a conviction for an offence are to be paid to the Environmental Damages Fund and used for the purposes of conservation and protection of fish or fish habitat or for administering the fund. The courts are provided power to recommend that the fine be paid to a specific person or organization.

Bill C-45 also contains several amendments to the provisions of the Fisheries Act which were brought in under Bill C-38 but are not yet in force. Key among those is the rule related to obstruction of rivers and streams. In Bill C-38, the obstruction rules had been rewritten to create a prohibition against obstructing more than two-thirds of the width of any river or stream or more than one-third of the main channel at low tide of any tidal stream. However, Bill C-38 did not include the power to the government to authorize such obstructions, which would be problematic for any entity proposing to build a dam or other obstruction across a river or stream. Bill C-45 amends the pending Fisheries Act changes to remove the prohibition of obstruction of more than two-thirds of the width of the river or a stream. Thus, the need for an authorization is no longer an issue.

Another change to theBill C-38 amendments, which are not yet in force, is an amendment to the definition of "aboriginal fishery" to include purposes set out in a land claims agreement entered into with an aboriginal organization. Finally, Bill C-45 introduces transitional provisions which would address section 35 authorizations issued under the Fisheries Act before the amendments are brought in.

Canadian Environmental Assessment Act, 2012

Bill C-45 makes some minor amendments to the new Canadian Environmental Assessment Act, 2012 which was brought into force under Bill C-38 in July 2012. These amendments are to clean up terminology and do not significantly change the new environmental assessment regime.

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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