Canada: Changing The Landscape Of Ontario’s Environmental Approvals Process

Executive Summary

The Ontario Ministry of the Environment (the MOE) has made sweeping amendments to the Ontario Environmental Protection Act (the EPA) and the Ontario Water Resources Act (OWRA) through the omnibus Open for Business Act (the OBA), which received Royal Assent on October 25, 2010.  The OBA seeks to incorporate a two-tiered risk-based approach to environmental approvals. It aims to reduce the administrative burden on businesses by establishing an online public registry for "lower-risk" activities, while strengthening and streamlining environmental approvals for "higher-risk" activities. However, as no regulations have yet been released under the OBA, and nothing in the act actually defines or uses such risk-based terminology, it is difficult to anticipate what those "lower-risk" and "higher-risk" activities will be. That said, a key amendment from the perspective of businesses is the ability for a business to apply for, and for the Director to issue, a site-wide approval that will apply not only to all contaminant emission sources at a site, but also to any sewage works or waste activities that occur at the site. In addition, if an activity is carried out at more than one site, an application may be made, and an approval granted, for a single approval for all sites where the activity is conducted. Combining these two powers could lead to interesting possibilities, the advantages and disadvantages of which would have to be carefully considered before an application is made.

While the amendments referred to above appear to provide advantages to businesses in Ontario requiring environmental approvals, other changes may not be as business-friendly. When declared in force, the amendments will give the Director an apparently unfettered discretion to require public consultation or a hearing regarding any application for approval for higher-risk activities. Depending on how the discretion is exercised, these amendments may at least diminish and at worst negate any advantages realized by the new process, at least for businesses engaged in higher-risk activities.

Commentary

The MOE has made sweeping amendments to the EPA and the OWRA.  The OBA received Royal Assent on October 25, 2010.  The omnibus bill, which makes over 100 revisions to approximately 50 provincial statutes administered by ten different ministries, includes 87 amendments to the EPA alone, spanning 40 pages of legislative text.

Significantly, the OBA seeks to incorporate a two-tiered risk-based approach to environmental approvals. It aims to reduce the administrative burden on businesses by establishing an online public registry for lower-risk activities, while strengthening and streamlining environmental approvals for higher-risk activities. A key amendment from the perspective of businesses is the ability for a business to apply for, and for the Director to issue, a site-wide approval that will apply not only to all contaminant emission sources at a site, but also to any sewage works or waste activities that occur at the site. In addition, if an activity is carried out at more than one site, an application may be made, and an approval granted, for a single approval for all sites where the activity is conducted. Combining these two powers could lead to interesting possibilities, the advantages and disadvantages of which would have to be carefully considered before an application is made.

Once declared into force, the MOE anticipates that the registry and the new environmental compliance approval (ECA) process could save businesses up to 25% of their project application costs. Visit Ontario Is Open For Business.

However, the OBA also gives the Director the power to require that public consultation occur and that a hearing be held regarding any application for approval for higher-risk activities. On the face of it, the discretion appears relatively unfettered and, if exercised frequently, it could negate any advantages the amendments may give businesses carrying out higher-risk activities.

The OBA also grants the Director the power to formally consider past conduct as part of the approval process, adding an additional impetus for companies to act in good faith when registering with the online registry or applying for approvals. 

In addition to changing the landscape of Ontario's environmental approvals process, the OBA expands the MOE's inspection powers by granting provincial officers the power to require a regulated person to "respond to reasonable inquiries" for the purposes of determining compliance with the EPA and to pay an "administrative penalty" for failing to comply with specified requirements under the registration and approvals process.

Part II.1 – Environmental Compliance Approvals for "Higher-Risk" Activities

The most consequential environmental amendments for Ontario businesses in the OBA are those to the EPA's environmental approvals process, which includes the addition of two new parts to the statute:  Parts II.1 and II.2.

Pursuant to the OBA, Part II.1 of EPA now deals with ECAs. Sections 20.2 and 20.3 sets out rules with respect to applications for approval to engage in the activities mentioned in sections 9 and 27 of the EPA (air and waste approvals) and section 53 of the OWRA (sewage works approvals).

Specifically, the OBA amends sections 9 and 27 of the EPA (and section 53 of the OWRA) to eliminate the requirement to obtain a certificate of approval or provisional certificate of approval for activities with respect to air emissions, waste management and sewage works. Instead, persons engaging in (higher-risk) activities that are not prescribed by regulation as being able to use the new, simpler registration procedure (specified under the new Part II.2 of the EPA) are now required to obtain an ECA. Those (lower-risk) activities that are specified in the regulation will not be required to obtain an ECA. To date, no regulation designating any such activities has been released.

Sections 20.4 and 20.5 establish the process by which ECAs may be reviewed. A holder of an ECA may apply for a review of that approval at any time, but must do so within a specified period of time, either to be prescribed by the Director in the ECA or as prescribed in the regulations. However, the ECA will remain in effect unless it is suspended or revoked by the Director.

Significantly, section 20.7 of the EPA allows the Director to suspend, revoke or refuse to issue an ECA if the past conduct of the holder of the approval or the applicant (or, if a corporation, of the corporation's officers and directors) gives the Director reasonable grounds to believe that the person or corporation will not engage in the activity in accordance with the EPA, the OWRA or the regulations.  In addition, section 20.13 of the EPA grants the Director the power to, on his or her own initiative, alter or revoke terms and conditions of an ECA after it has been issued, impose new terms and conditions, or suspend or revoke all or part of an approval. These added powers of the Director put a premium on the applicant's track record for compliance with Ontario's environmental laws.

The Director is also expressly empowered to demand specific supporting documentation and test reports from an applicant before granting an ECA (section 20.8).  Such supporting documentation could include plans, specifications, technical reports or other such information. Applicants can also be required to carry out and report on any tests or experiments relating to any activity in respect of which the ECA application is made.  This appears to largely be a codification of current practice.

The more "streamlined" nature of the new approvals process in the OBA primarily stems from sections 20.2(5 to 8) and 20.10, which grants the Director the power to issue an ECA in respect of one or more activities at one or more sites. Therefore, where a business engages in multiple regulated activities such as waste disposal, air emissions and sewage works, it can apply for a single ECA (unless the Director requires otherwise). It is hoped that this will lessen the bureaucratic red tape for many organizations who carry out multiple activities caught by the EPA and the OWRA.

Of some concern, however, is the fact that the OBA grants the Director a general power to require an applicant to "consult with the persons specified by the Director in a manner specified by the Director before the Director makes a decision in respect of the application" (section 20.9).  This provision is vague in its wording, its intent is unclear and it does not provide any restrictions or guidance on how the discretion to require consultation is to be exercised.  Specifically, the "persons specified" and the "manner specified" has not been set out in the legislation or in a regulation. There is a real danger that such a vague consultation provision could be misapplied or could unreasonably delay and frustrate the newly "streamlined" approval process.

Equally concerning is that the Director, before making an approval decision, may require the Environmental Review Tribunal (the ERT) to hold a hearing regarding an application or a matter relating to an application (section 20.15). As with the power to require consultation, the section does not provide any restrictions or guidance on how the discretion to require a hearing is to be exercised. As a result, the ERT could become involved in the approvals process whenever the Director deems it appropriate. The failure to circumscribe the discretion could lead to the Director "punting" potentially controversial decisions to the ERT and avoiding the potential political fallout that could ensue from making such a decision. This is a departure from current practice in that, previously, the Director could only require a "discretionary" hearing by the ERT with respect to certain waste approvals: see section 32 of the EPA.  The Director previously had no authority to require discretionary hearings by the ERT with respect to either air or sewage works approvals.

The ERT's decision on an application for an ECA, which is required to include reasons, must be implemented by the Director (subsection 20.15(6)).  Significantly, the OBA has amended the EPA to allow the ERT to award the costs of a proceeding under this section, to fix those costs and to order to whom and by whom those costs are to be paid (subsections 20.15(7)-(11)). As a result, the Director, the applicant or any participant could be required to pay the costs of a hearing.      

The amended EPA continues to include the same rights of appeal in respect of the ERT's decision as exist under the current legislation.  Under section 20.16, a party to a proceeding before the ERT can appeal from the ERT's decision on a question of law to the Divisional Court, and on a question other than a question of law to the Minister. Such an appeal must be made in writing within 30 days after the party received the decision.

It is also noteworthy that the Director may, by order, force a person whose site activity falls under Part II.2 of the Act (which would otherwise be exempted from any ECA requirement) to nevertheless obtain an ECA (subsection 20.18(1)). 

Part II.2 – Registrations for "Lower-Risk" Activities

Pursuant to the OBA, Part II.2 of the EPA establishes the Environmental Activity and Sector Registry (the EASR), a public online searchable registry which allows persons to register activities prescribed by the regulations for purposes of subsection 20.21(1).  When Ministry notification of the proposed legislation was first posted on the Environmental Bill of Rights Registry (the EBR Registry) on June 24, 2010, the new EASR was described this way:

Currently, Certificates of Approval and Provisional Certificates of Approval are issued under sections 9 and 27 of the Environmental Protection Act (EPA) and approvals are granted under section 53 of the Ontario Water Resources Act (OWRA). The proposed legislation introduces a new risk-based approach to environmental approvals by amending the EPA and OWRA. Changes in the approval process would include:

  • Creation of a registration process for activities specified by regulation. It is anticipated that these activities would be those categorized as lower-risk, standard or less-complex in nature. Remaining activities would be required to obtain an Environmental Compliance Approval.

Although the anticipated purpose of the EASR is to exempt "lower-risk, standard or less-complex" air, waste or sewage works activities from their former approval requirements, no regulations have yet been proposed under the OBA so it is difficult to anticipate what those "lower-risk, standard and less-complex" activities will be.  The OBA makes no reference to this "lower-risk" terminology, and establishes no such precondition to the use of the EASR.

Specific sections of the OBA also outline how the EASR will operate. For instance, subsection 20.21(1) prohibits persons from engaging in any activity prescribed by the regulation for the purposes of Part II.2, unless the activity has been registered in the EASR, the Director has provided a confirmation of registration, the registration is in effect, and the person is engaging in the activity in accordance with the rules prescribed by the regulations.

As long as a person registers a prescribed activity in the EASR, pays the required fee and provides the required financial assurance, if applicable (i.e., cash, a letter of credit, bond or agreement), the Director is mandated to provide the person with an electronic confirmation of registration (subsection 20.22(1)). In turn, the person who engages in a registered activity must ensure that the registration is maintained and updated in accordance with the regulations and that the registration includes any information, reports, records or documents as may be required by the Director or prescribed by the regulations (subsection 20.22(2)).

If the Director is not satisfied that the information, reports, records or documents included in or filed with a registration are accurate or complete, the Director may require the person engaging in the registered activity to file complete and accurate documents (subsection 20.22(3)). What will satisfy the requirements of "completeness" and "accuracy" is not specified, and appears to be left to the discretion of the Director or his/her delegates. Hopefully, the requirements of completeness and accuracy will not overwhelm the EASR and undermine the benefit of the streamlined process.

Of note, the Director can suspend or remove a registration from the EASR if he or she thinks that the person has contravened the EPA or the OWRA, or if the confirmation of registration was provided on the basis of mistaken, false or inaccurate information: section 20.23. If this is done, the Director must serve an Order together with written reasons on the person who is or was engaging in the activity (subsection 20.23(2)).

The Expanded Powers of Provincial Officers

In addition to these significant changes to the environmental approvals process, the OBA amends the EPA by expanding the powers of provincial officers to require persons to take certain actions or to respond to "reasonable inquiries" in order to ensure compliance with the act. 

First, the OBA adds subsection 157.0.1. This subsection allows a provincial officer to, at any reasonable time and with any reasonable assistance, require a person (or any person employed by or providing assistance to the person) to respond to "reasonable inquiries." These inquiries can be made by telephone or through any other means of communication. The new section 157.0.1 appears to be intended to overcome certain judicial decisions. For instance, prior to the OBA, a person's obligation to respond to the inquiries of a provincial officer was dependent upon the officer first attending at the business premises in person and entering it (without a warrant or court order) for the purposes of conducting an inspection, pursuant to section 156 of the EPA (see R. v. Crompton Co., 2004 CarswellOnt 6720 (Prov. Ct.)). Also, in Branch v. Ontario (Environment), 2009 CanLII 104 (Div. Ct.), the Court recently rejected the Ministry's attempts to use section 163.1 of the EPA (which allows a justice to make an order "authorizing a provincial officer ... to use any device, investigative technique or procedure to do any thing prescribed in the order ...") to obtain a court order allowing such inquiries. 

Second, the OBA adds subsection 157.4. This subsection allows a provincial officer to give notice to a person, who is engaging in an activity prescribed by the regulations for the purposes of a section 20.21 registration, that the provincial officer reasonably believes the person is contravening or has contravened the registration regulations. The provincial officer may require the person to carry out specified measures within a specified time period.

Further, the OBA amends the EPA by adding section 182.3, which allows for a provincial officer or the Director to issue an order requiring a person to pay an administrative penalty for failing to  comply with specified requirements under Parts II.1 and II.2 or a notice under section 157.4.

The Implications of the OBA

Generally, the OBA's revisions to the approvals process under the EPA and the OWRA have been lauded by business as reducing the bureaucratic red-tape associated with environmental approvals in Ontario. However, some environmental lobbyists have criticized the OBA as causing Ontarians to lose their legal rights under the Environmental Bill of Rights (the "EBR") to receive public notice and to have the opportunity to consult, comment upon and challenge activities subject to certain environmental approvals (i.e., those relating to lower-risk activities). Certain environmental stakeholders assert that Ontario residents would lose, for instance, their right to seek leave to appeal any approvals for lower-risk activities to the ERT pursuant to section 38 of the EBR (see Environmental Groups Challenge Ontario's Open for Business Act) dated May 18, 2010.

To the extent that activities are removed from an approvals regime and placed into the EASR, the observation that EBR leave to appeal applications may be avoided appears to be correct.  That said, for lower-risk projects this would appear to be a positive outcome, preventing unmeritorious delay which cannot be environmentally justified.  However, the more general criticism (that the OBA will defeat the public's right to notice and the opportunity to consult)  is incorrect.  Under the EASR system, all Ontario residents will have access to a searchable online database that, like the EBR Registry, will provide public notice of any registrations for lower-risk activities.  In appropriate circumstances, members of the public may be able to persuade the Director to make an order requiring, for instance, an environmental approval or public consultation for a particular activity.  Moreover, higher-risk activities will still be subject to a rigorous approvals process.  Finally, should anyone believe that a regulation made for the purposes of Part II.2 is inappropriate (i.e., too broad or too narrow), submissions can always be made to the government  conveying that belief.

In summary, the OBA may have a significant impact upon Ontario's environmental landscape in so far as Ontario businesses are concerned.  If implemented as envisioned, it should effectively avoid approval processes for lower-risk activities, and streamline the remaining approval processes for higher-risk activities under the EPA and OWRA, thereby providing greater business efficiencies.  The effectiveness of the efficiencies introduced will depend upon a number of factors, the most important being which activities the government deems through regulation to be "lower-risk" and "higher-risk."  As with most legislative reform, the challenge will be in ensuring the smooth and effective implementation of the new provisions.  For now, businesses ought to be satisfied that Ontario is moving in the right direction by proposing a significant reduction in government red tape in terms of getting their lower-risk projects off of the ground.

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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