Written By David Bursey, Marie H. Buchinski, Brad Gilmour, Venetia E.K. Whiting and Stephanie Ridge

This article is Part II of a series that discusses the federal government’s proposed changes to Canada’s environmental regulatory regime governing project development and operation in Canada.

In this article, we review the changes to Canada's project assessment regime proposed under Bill 69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts.

Bill 69 is the culmination of more than a year of review by expert panels, public consultation, Indigenous community input, and Parliamentary committee study. The federal government seeks to establish a project assessment process that will bring public acceptance and much-needed certainty to the review of major projects. The stakes are high because the project review process is at the intersection of many federal policy objectives that will shape our natural resource economy and define how Canada is viewed by developers who may wish to participate.

Although many core features of the current regime are retained, the proposed amendments are ambitious in scope, and will substantially change and expand important elements of Canada's impact assessment regime. Notable features include:

• a change in concept—impact assessment versus environmental assessment—that reflects a broader perspective on sustainable development;
• restructuring the agencies (CEAA and NEB)—creating the Impact Assessment Agency of Canada and the Canadian Energy Regulator;
• ultimate decisions on designated projects remain at the political level. Decisions will be based on a public interest test;
• more emphasis on considering the interests and traditional knowledge of Indigenous peoples and allowing opportunity for input;
• retaining but expanding the designated project and activity approach, rather than returning to a pre-CEAA 2012 approval “trigger” to decide what will be assessed;
• more emphasis on the planning phase to assess public interest and set the scope of the assessment;
• retaining inter-jurisdictional cooperation—joint reviews and the potential to approve a provincial process as a substitute;
• broader public participation, with funding and no test of standing to participate;
• longer list of factors that will be assessed, including: alternatives to the designated project and alternative means to carry out the project, a gender-based analysis of impacts, greater emphasis on cumulative effects and regional assessments, and impacts on climate change commitments;
• a continued emphasis on time limits for each phase of the assessment to reach decision; and
• emphasis on transparency, notices and detailed reasons for decisions.

The discussion that follows highlights areas of interest to those involved in project development or impact assessment.

Repeal of CEAA 2012, Enactment of the IAA, and CEAA’s Continuation as the Impact Assessment Agency of Canada as the Lead Regulatory Agency

The Canadian Environmental Assessment Act, 2012 (CEAA 2012) will be repealed and replaced by the Impact Assessment Act (IAA). The Canadian Environmental Assessment Agency of Canada (CEAA) will be continued as the Impact Assessment Agency of Canada (Agency). Unlike the CEAA, the Agency will also assume an expanded role as the authority responsible for impact assessments.

Broadened Scope of Effects

The move from environmental impact assessment to broader impact assessment is reflected throughout the IAA. This new approach is demonstrated in the expanded scope of “effects” which include “changes to the environment or to health, social or economic conditions and the consequences of these changes”. Positive and negative effects must be considered.

This broader scope has existed in provincial regimes for some time—for example, British Columbia’s “five pillars” of assessment (environmental, economic, social, heritage and health effects) which is based on a sustainable development approach.

In addition, the IAA requires consideration of “adverse direct or incidental effects”: effects directly linked or necessarily incidental to a federal authority's exercise of a power or duty that would permit the physical activity or designated project, or that are linked to a federal financial assistance to enable an activity.

Definition of the Public Interest

The IAA redefines public interest. When deciding whether a project is in the public interest, the Minister and Governor in Council must consider the factors set out at section 63, including the following:

• the extent to which the designated project contributes to sustainability;
• the extent to which the effects, direct and indirect, within federal jurisdiction are adverse;
• the implementation of the mitigation measures that the Minister or the Governor in Council considers appropriate;
• the impact the designated project may have on any Indigenous group and the rights of the Indigenous peoples of Canada recognized and affirmed by section 35 of the Constitution Act, 1982; and
• the extent to which the effects of the designated project hinder or contribute to the Government of Canada’s ability to meet its environmental obligations and its commitments on climate change.

Emphasis on Indigenous and Public Participation

The IAA contains several new requirements for the Minister relating to Indigenous peoples, including expanding the science-based approach upon which decisions are based to include Indigenous traditional knowledge. Potential impacts on the rights of Indigenous peoples is one of several factors that the Minister or the Governor in Council must consider when determining if an activity is in the public interest.

The Agency must offer to consult with any Indigenous group that may be affected by the carrying out of the designated project at the planning stage of an assessment. The Agency must also consider any potential adverse impact on the rights of Indigenous peoples when determining if an impact assessment is necessary, and must take these effects into account.

The definition of “effects” as it relates to Indigenous peoples remains unchanged from CEAA 2012, and includes effects on Indigenous peoples' health, social or economic conditions, and any change to the environment that results in changes to their heritage, current land use for traditional purposes, or historical sites.

Separately, the IAA contains provisions to protect the confidentiality of traditional knowledge of Indigenous peoples provided as part of a review. The Agency must also establish an advisory committee to advise on the interests of Indigenous peoples related to assessments under the IAA.

Notably, the IAA does not establish a test for standing for public participation. Public comments must be considered in an impact assessment, but they are not a factor that must be considered when determining whether a project is in the public interest. This inclusive approach in combination with the expanded list of factors to consider will expand the scope and complexity of assessments.

The Minister must also consider public input when determining whether to convene a joint review panel.

Amended Pathways and Timelines for Proponents

a. Role of the Agency

Under the IAA, the Agency will be responsible for leading all impact assessments for designated projects, and will cooperate where necessary with other bodies (e.g., through joint review panels) at various stages outlined below. Non-designated projects will continue to be regulated through the “lifecycle regulators” such as the National Energy Board, but remain subject to other federal environmental regulation—for example, the requirements of the Fisheries Act.

b. Minister’s Discretion to Designate

Like CEAA 2012, the Minister retains the ability to designate an activity for assessment if the activity would cause an adverse effect within federal jurisdiction, adverse direct or incidental effects, or where public concern warrants it.

Under the IAA, the Minister must consider any adverse impact on the rights of Indigenous peoples into concern before making the order.

c. Planning Phase

The creation of a planning phase places greater emphasis on pre-application consultation and setting the scope for the regulatory process. This up-front work will assist the Agency in assessing the level and nature of public interest to decide whether an impact assessment is required.

During this phase, the Agency will offer consultation to any jurisdiction with powers related to the activity and any Indigenous group that may be affected by the carrying out of the designated project, and will establish opportunity for public comment. Federal authorities with relevant expertise or information must also assist the Agency if requested.

At the end of the planning stage, the Agency will give the proponent a summary of relevant issues gathered through the planning phase. The Agency may also request additional information before deciding how to proceed.

Upon receiving all necessary information, the Agency will decide whether an impact assessment is required, and must consider:

• the possibility of adverse effects within federal jurisdictions or adverse direct or incidental effects;
• any adverse impacts on the rights of Indigenous peoples;
• any comments received from the public;
• any relevant regional or strategic assessments;
• any study prepared by a jurisdiction; and
• any other factor that the Agency considers relevant.

d. Commencement

Once the Agency determines that an impact assessment is required, it has 180 days from the date the proponent provided its initial description to issue a notice of commencement. A notice of commencement must set out what information or studies are required for the Agency to complete its assessment.

Once a notice of commencement is issued, the proponent has three years to file required reports. If it does not, the assessment is terminated.

e. Assessment

Section 22 lists the factors that must be considered as part of an impact assessment. A few of the more notable—and mandatory—factors include:

• the effects of the project, including the effects of malfunctions or accidents and cumulative effects from the designated project in connection with other physical activities that have been or will be carried out;
• the impact the designated project may have on any Indigenous group and their aboriginal rights;
• alternative means of carrying out the project that are technically and economically feasible, including through best available control technology;
• alternatives to the project;
• traditional knowledge of Indigenous people “provided with respect to the designated project”;
• the extent to which the effects of the designated project affects Canada’s environmental obligations and commitments to climate change;
• considerations related to Indigenous cultures raised by the project;
• community knowledge provided with respect to the project;
• comments from the public regarding the project;
• comments from a jurisdiction received at the planning stage;
• any assessment, study, or plan that is conducted by or on behalf of an Indigenous governing body or a jurisdiction; and
• the intersection of sex and gender with other identity factors.

f. Review by the Agency

The first—and default—path for assessment is for the Agency to undertake the review. As part of a review, the Agency may require the collection of information or undertaking of any study it deems necessary, and must include public participation.

Following its review, the Agency must submit a draft report setting out the likely effects of the designated project within 300 days of the notice of commencement, including a period of public comment on the draft report.

The IAA allows the Minister to extend the time limit in a variety of circumstances, including to seek further information from the applicant.

g. Review by a Review Panel

The Minister may refer the impact assessment to a review panel within 45 days from the notice of commencement, after considering:

• extent to which the effects within federal jurisdiction may be adverse;
• public concerns regarding those effects; and
• opportunities to cooperate with any jurisdiction with power to assess the environmental effects.

A review panel must complete its report within 600 days of its appointment. The Minister may terminate the assessment if the Minister thinks the panel will not submit its report within the time limit, or if it fails to do so.

h. Joint Reviews and Substituted Reviews

The Minister must establish a joint review panel for designated activities under the Canadian Energy Regulator Act or the Nuclear Safety and Control Act.

For projects that do not come under the jurisdiction of the CER or the CNSC, the Minister may also establish a joint review panel with another jurisdiction by agreement. The Minister must establish or approve the review panel's terms of reference, including a time limit, and appoint a chairperson and at least one member of the panel.

If requested by a province, the Minister may approve a provincial assessment process as a substitute for the federal process, if the Minister is satisfied the provincial assessment will include the same elements, including the assessment considerations. Similarly, the Minister may also approve an assessment by an Indigenous governing body as a substitute in the right circumstances.

i. Decision

After receiving a draft report from the Agency, the Minister will determine if the adverse effects within federal jurisdiction are in the public interest, and then must refer the question of whether the project is in the public interest to the Governor in Council.

Where the review is conducted by a joint review panel, the Minister must refer the decision of whether the matter is in the public interest to the Governor in Council.

The IAA prescribes the factors that both the Minister and the Governor in Council must consider when determining whether the activity is in the public interest. These include:

• the extent to which the designated project contributes to sustainability;
• the extent to which the adverse effects within federal jurisdiction are adverse;
• the implementation of the mitigation measures that the Minister or the Governor in Council considers appropriate;
• the impact that the designated project may have on any Indigenous group and their rights; and
• the extent to which the effects of the designated project affects Canada's ability to meet its environmental obligations and its commitments on climate change.

The Minister must issue a decision statement and any related conditions to the proponent within 30 days of the Agency report being posted on the Agency website or within 90 days of the joint review panel's report being posted.

Ongoing Consultation on Definition of Designated Projects

The full range of designated activities is still unknown. Public consultation on the contents of the Designating Physical Activities Regulation is currently underway.

The public is also being asked to provide feedback on what information a project proponent ought to provide at the planning stage of an impact assessment. Once finalized, the Information and Time Management Regulations will outline the requirement for the information as required at the planning phase as well as the criteria to guide suspension of timelines.

Anyone interested in submitting comments on either of these regulations may do so by April 15, 2018, by following the instructions at the Government of Canada’s website.

Implications for Federal Project Assessment

While many important details are being worked out, it is clear the new assessment regime will have several practical implications:

• Retaining the ultimate decision at the political level—Minister or Governor in Council—is important to allow for the weighing of public interest, policy direction, and risk trade offs. These are political not legal or scientific decisions, for which the government will be accountable.
• The broader scope of the assessment list of factors to consider will complicate the federal assessment, which will add cost and effort on project developers.
• Increasing the opportunity for public participation, with funding, will increase the level of public participation which has the potential to overwhelm the process. It will fall to the Agency or the review panel to manage that public input effectively.
• The strong emphasis on the planning phase will shift more work to the front-end of the review process which must be factored into a project planning timeline. If the planning phase is implemented well, however, it should set the conditions for a more efficient assessment.
• The expanded list of factors to consider will increase the information required from the applicant and increase the analysis required by the assessing agency. A broader consideration of the positive and negative effects could be helpful to refocus assessments on sustainable development—i.e., weighing the social and economic impacts, rather than simply the environmental impacts.
• The regulations related to the list of designated activities and the information required for assessments are important foundational elements of the review. Both will add certainty about the assessment process. Careful drafting of these regulations is important to achieving the desired policy goals.
• Regional and strategic assessments could help respond to the interest in cumulative effects, far better than considering cumulative assessments on a project-by-project basis. Those assessments will take a strong commitment of time and resources to complete.
• Similarly, it will be challenging for project developers to respond to the interest in assessing alternative projects in addition to alternative means to carry out a project. The cost and effort of assembling information to assess a designated project is substantial already, without the added burden of researching undefined alternatives.
• While the IAA allows the Minister to approve a provincial assessment process as a substitute, the Minister must be satisfied that the provincial assessment meets the same requirements as the federal assessment. Given the expanded scope of the new federal assessment, the substitution process will face challenges. The substitution arrangements will require meticulous planning to withstand inevitable legal challenges.

The ambitious blueprint laid out by Bill 69 will require substantial federal resources—people, time and expertise—to achieve its goals of increasing public confidence in the process and creating more certainty for project developers. In a world where capital for resource development projects is mobile, Canada must have an efficient and effective project review process to compete to attract capital to develop our natural resources and civil infrastructure.

Those with an interest in shaping the final version of Bill 69 and its related regulations should be involved in the public comment opportunities. Our team at Bennett Jones LLP would be pleased to assist you.

 

More on This Series

Part I: Federal Review of Environmental and Regulatory Processes Underway
Part III: Sea Change: The Canadian Navigable Waters Act