Canada: Expert Report On Environmental Assessment Gives Rise To More Uncertainty

In this Update

On April 5, 2017, the Expert Panel for the Review of Environmental Assessment Processes in Canada released its Final Report entitled Building Common Ground: A New Vision for Impact Assessment in Canada. This Update outlines the Expert Panel's recommendations and their potential impact on environmental assessments and the regulatory process. It also examines the implications of the recommendations on the competitiveness of Canada's resource industries.

Background

On August 15, 2016, the Minister of Environment and Climate Change established an Expert Panel (Panel) to review federal environmental assessment processes in Canada. This review was predicated on the Liberal government's belief that the Canadian public had lost confidence in the environmental assessment process under the Canadian Environmental Assessment Act, 2012 (CEAA 2012). Among other things, the Panel was tasked with considering how public confidence in environmental assessments could be restored.

The Panel consisted of four individuals: Johanne Gélinas, an environmental consultant and the former Canadian Commissioner of the Environment and Sustainable Development; Doug Horswill, a former executive at Teck Resources Ltd.; Rod Northey, an environmental lawyer at Gowling WLG; and Renée Pelletier, the managing partner at Olthius Kleer Townshend LLP, a firm well known for its representation of Aboriginal groups in Canada.

Between August 2016 and April 2017, the Panel visited 21 cities across Canada, received 520 written submissions, held workshops and dialogue sessions with 1,035 individual participants and heard 397 in-person presentations. It released its report Building Common Ground: A New Vision for Impact Assessment in Canada [PDF] on April 5, 2017. The public has been invited to submit comments on the Panel's report until May 5, 2017.

Panel's recommendations

Despite the Panel's belief that it is "not proposing the creation of something entirely new," the Panel has proposed fundamental changes to the way that environmental assessments are conducted in Canada. Among other things, the Panel has recommended changes to the following:

  • the purpose and scope of environmental assessment (which the Panel believes should be changed to "impact assessment" to reflect a broader consideration of all positive and negative impacts of a proposed development on the well-being of Canadians);
  • the process for assessments (which the Panel believes should commence very early in a project's development before most important decisions have been made, and should involve collaborative multi-stakeholder committees that seek to achieve consensus on all procedural and substantive issues that arise during the assessment);
  • who is allowed to participate in the assessment (essentially, anyone who expresses an interest in the project);
  • who conducts the assessment (a new Impact Assessment Commission or "IAC");
  • who makes the ultimate decision on the project (the new IAC, with a right of appeal to the Governor in Council); and
  • the test for a project to proceed (instead of the current "significance" test, the Panel proposes that a project should be assessed against "sustainability criteria" to ensure that the project will result in a "net benefit" to sustainability).

In our view, many of the Panel's specific recommendations are sound and would improve environmental assessments. These include the following:

  • increasing the capacity of federal agencies to ensure that they participate effectively in environmental assessments;
  • expanding the informal options for the public to participate in environmental assessments, such as through open houses and workshops;
  • requiring all information generated during environmental assessments to be accessible to the public through an online registry, and also posting information about post-construction monitoring and enforcement to the registry;
  • allowing the regulator to compel expertise from federal scientists and retain external scientists to provide technical expertise;
  • requiring all environmental assessment decisions to include clear reasons that allow members of the public to understand the rationale for the decisions;
  • encouraging more collaboration between the proponent, governments and interested parties early in the regulatory process through collaborative multi-stakeholder committees;
  • revising the legislation to allow conditions in Decision Statements to be amended; and
  • encouraging greater use of regional and strategic environmental assessments, which could help focus project-specific assessments on the specific impacts of the project being considered.

Some of the Panel's other recommendations, however, are unworkable in our view and would introduce considerable uncertainty into the regulatory process. These recommendations include the following:

  • Changing the ultimate approval test from "significance" to "sustainability," combined with a transfer of decision-making responsibility from government to independent Commissioners, would introduce considerable uncertainty into the outcome of the environmental assessment process. As the Panel itself notes, "sustainability" is a term that means different things to different people. For example, the Joint Review Panel for the Lower Churchill Falls project interpreted sustainability to mean that a project should result in net environmental, social and economic benefits.[1] For most projects, that is an impossible standard as there are trade-offs between environmental impacts and social and economic benefits. In fact, the entire concept of sustainability, as first enunciated in Our Common Future,[2] understood sustainability to be a balancing of social, economic and environmental interests. The Panel recommends that "objective" sustainability criteria be developed for each project, considering matters such as "Are the benefits and costs of the project fairly distributed?" In our view, these types of questions are inherently subjective. Especially given that project proponents will not know who will make the ultimate decision on their projects, or what specific criteria will be considered, adopting a "sustainability" test for project approval would create considerable uncertainty regarding the outcome of any environmental assessment.  
  • The Panel supports the current objective of "one project, one assessment," but recommends determining the specific approach to federal-provincial co-operation on a case-by-case basis as part of the planning process for each project. In addition, while the Panel recommends keeping "substitution" of a provincial review process as an option for co-operation, it suggests that the requirements for substitution should be strengthened to ensure that the federal government's principles are upheld (and federal regulators and experts are involved), and that Indigenous groups should be actively involved in any substitution decision. This approach would make it more difficult to predict the nature and extent of the environmental assessment process in advance of developing a project.
  • While the Panel recognizes the importance of time limits in imposing discipline in the environmental assessment process and providing certainty to proponents, it recommends that project-specific timelines be developed for each stage of the project review process based on the individual circumstances of each project. This approach would reduce the ability to predict the timing of the environmental assessment in advance of developing a project. 
  • The Panel makes extensive reference to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and recommends that in order to reflect UNDRIP, all Indigenous peoples who are affected by a project should have the right to provide or withhold their consent. If consent is withheld, a review panel will then determine whether that decision was "reasonable." If an Aboriginal group withholds consent and a review panel finds that decision to be reasonable, the project will not be allowed to proceed.

This recommendation is inconsistent with Canadian law, which is that Aboriginal groups do not have a veto over project development.[3] While proponents and governments should consult with Aboriginal groups with the objective of obtaining the group's consent, Aboriginal groups should not have the power to veto projects that are in the overall public interest of Canada. Adopting this recommendation would introduce considerable uncertainty into any resource development in Canada, particularly for linear projects that have the potential to affect hundreds of Aboriginal groups (like some major pipelines and transmission lines). In addition, the practical result of this recommendation would be to significantly and disproportionately increase the leverage of Aboriginal groups in negotiating Impact Benefit Agreements.

While 100% consensus is a goal that parties should strive towards, failure to reach consensus should not mean that a project cannot proceed if it is otherwise in the Canadian public interest.

  • The other issue with the Panel's recommendations from an Aboriginal law perspective is the Panel's recommendation that the IAC should be an agent of the Crown responsible for substantive Crown consultation and accommodation with Aboriginal groups. At the same time, the Panel recommends that the IAC should be a quasi-judicial tribunal. These two functions are likely incompatible. As a quasi-judicial tribunal, the IAC would be required to treat all parties impartially and fairly, and it would need to ensure that it complies with all requirements of procedural fairness. Consistent with Taku River,[4] the regulatory process may be sufficient in some cases to satisfy the duty to consult. To the extent that the IAC is also responsible for conducting direct consultation with Aboriginal groups, however, the IAC may owe Aboriginal groups a fiduciary duty and would need to treat them differently than other stakeholders. In our view, it would likely be impossible for the IAC to adequately fulfill these two different roles.
  • The Panel recommends transferring responsibility for preparing the Environmental Impact Statement from the project proponent to the IAC. While the Panel notes that this would reduce the perception of bias in environmental assessments, it would introduce further uncertainty into the environmental assessment process from the perspective of project proponents. Today, the proponent has control over the timing of environmental studies and can ensure that the consultant it selects has sufficient capacity, resources and qualifications to conduct the work. It would lose this control under the Panel's proposal. In addition, the Panel's approach would only work if the IAC was sufficiently resourced, which would require significant funding from the federal government. If that funding were to be cut in the future, or if the IAC's actual costs were to exceed its funding, the IAC would be unable to perform its functions and all projects subject to environmental assessment would be jeopardized.
  • The Panel recommends eliminating the "standing test" in CEAA 2012 because it believes that excluding individuals or groups from the assessment process erodes any sense of justice and fairness. This is one of the common criticisms of CEAA 2012, and arguably one of the main reasons that members of the public have lost confidence in the environmental assessment process. In our view, however, allowing expanded opportunities for participation in environmental assessments does not require eliminating the standing test. For example, the Panel suggests including new processes into the early phases of environmental assessments such as open houses. These should be open to anyone who wishes to attend. However, if a hearing is required at the end of the process (as the Panel contemplates for any issues that cannot be decided by consensus of the parties), some form of standing test is needed to make the hearing workable. For example, if all 15,000 individuals who submitted letters of comment in the Shell Jackpine Mine Expansion hearing (some from as far away as Belgium) had been allowed to cross-examine Shell's witnesses and present witness panels, the hearing would still be in progress. That outcome is not feasible, nor is it in the public interest of Canadians. In addition, parties with genuine interests in a project should not be drowned out in a hearing by allowing too many parties to participate that do not have a genuine interest in the project. In our view, there needs to be some form of standing test in hearings to make the process work as it is intended. 

The Panel's recommendations misconstrue the purpose of environmental assessment

Canada's regulatory process, including environmental assessments, must reflect the objective of regulation, as opposed to prohibition, of resource development. Resource development is perfectly legal in this country, and is a significant part of Canada's economy. Before any project proposal can be developed, most resource projects require mineral rights which the developer must acquire from the government (often at a significant expense). It is a well-established common law principle that a right to mines and minerals includes the right to do all things necessary to work and recover the minerals.[5] As a result, once mineral rights have been acquired, the developer has a legitimate expectation that it will be allowed to develop the resource. All Canadians should similarly have an expectation that once mineral rights have been issued, the resource will be developed for their benefit. This does not mean that the mineral rights can be developed no matter the consequences, but absent extraordinary circumstances the focus of the regulatory process should be on how the resource is developed, not whether it is developed. Similarly, environmental assessments should be about informed decision-making in furtherance of good regulation.

The Panel's approach to consensus-based decision-making and evaluating projects against sustainability criteria does not give meaningful consideration to the legitimate expectations of mineral rights' holders (and those of the Canadian public) and the purpose of environmental assessment.

Implications of the Panel's recommendations on Canadian competitiveness

In our experience, many of the companies that propose resource developments in Canada also have investment opportunities in foreign countries and must evaluate their Canadian projects against other investment options. To do so, they need to understand the "rules of the game" in each jurisdiction to understand what is required and how long it will take to obtain regulatory approvals, and the ultimate risk that approvals will be denied at the end of that process. Canada needs to ensure that its environmental assessment process is robust and can be relied upon by the Canadian public. But any reforms should also consider the impacts to the competitiveness of Canada's resource industries, which are a significant part of the Canadian economy. Ignoring the economic leg of the sustainability stool is not helpful to informed decision-making.

In our view, many of the Panel's recommendations are sound and would improve the current environmental assessment process. Others, however, create unacceptable risk because of the level of uncertainty they inject into a process that is already thought to be broken in international markets.

 Footnotes

[1] Lower Churchill Hydroelectric Generation Project Joint Review Panel, Report of the Joint Review Panel, Lower Churchill Hydroelectric Generation Project (August, 2011) at 354.

[2] Brundtland et al., Our Common Future, the Report of The World Commission on Environment and Development, (Oxford University Press: Oxford, 1987).

[3] Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, at 48.

[4] Taku River Tlingit First Nation v. British Columbia (Project Assessment Director), [2004] 3 SCR 550.

[5] Borys v. Canadian Pacific Railway, [1953] A.C. 217 (P.C.).

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.