Canada: New Environmental Assessment Legislation

Edited by Luke Dineley

On April 26, 2012 the federal Parliament gave first reading to Bill C-38, the Jobs, Growth and Long-term Prosperity Act, with second reading on May 14, 2012. This lengthy statute implements the federal government's recent Budget, including the commitment to streamline the review process for major economic projects. The legislation amends several federal environmental statutes including the Canadian Environmental Protection Act, the Fisheries Act, the Species at Risk Act and the National Energy Board Act. It also repeals and replaces the current Canadian Environmental Assessment Act with an entirely new statute also called the Canadian Environmental Assessment Act. Bill C-38 represents a very significant shift in the federal government's role with respect to environmental matters.

The new Canadian Environmental Assessment Act ("CEAA") is fundamentally different from the current CEAA in a number of respects. The new legislation implements many of the recommendations contained in the March 2012 Report of the Standing Committee on Environment and Sustainable Development issued following the mandatory statutory review of the current CEAA. It is anticipated that the new CEAA will provide a more transparent, focussed and efficient environmental assessment process for major projects.

Which Projects are Subject to Review?

Under the current CEAA all projects regardless of size are required to undergo an environmental assessment if there is a federal "trigger" (i.e. a federal proponent, federal money, federal land or a listed federal permit or approval) and the project is not excluded from review under the Act or regulations. Under the new CEAA, on non-federal lands only "designated projects" that are linked to a federal authority will be subject to review. Designated projects and the federal authority for those projects will be listed in a regulation. The Minister of Environment also has a discretion to designate a project for review under the Act, but that designation must occur before the project has started or a federal authority has exercised a power or duty with respect to that project.

This change in approach is very welcome as it provides much greater certainty to project proponents regarding the requirement for an environmental assessment.

On federal lands, specified federal authorities must not carry out a project or exercise any power or duty that would permit the project to be carried out unless the authority determines the project is not likely to cause significant adverse effects or Cabinet determines that any significant adverse effects are justified.

Can a Designated Project Be Exempt from Review?

For designated projects where the Canadian Environmental Assessment Agency (the "Agency") is the responsible authority, the new CEAA contains a screening process under which the Agency may decide that an environmental assessment is not required. The proponent must submit a project description to the Agency. The Agency must post notice of the project on the Internet and provide the public with 20 days to comment on the project. Within 45 days after posting the notice on the Internet the Agency must decide if an environmental assessment of the project is required. Notice of that decision must be posted on the Internet.

The presence of this screening process in the legislation may indicate that the list of designated projects will be somewhat broader than current speculation suggests. This screening process does not apply to designated projects where the Agency is not the responsible authority.

Who Conducts the Assessment?

Under the current CEAA a project may trigger the requirement for an assessment by various federal authorities. Over the years the federal government has introduced a number of measures to coordinate such reviews; however, notwithstanding these efforts the fact remains that the current CEAA imposes a legislative obligation on many federal authorities to conduct an environmental assessment with respect to the same project. That will no longer be the case under the new CEAA.

Under the new CEAA a single environmental assessment will be conducted by one of four agencies – the National Energy Board ("NEB"), the Canadian Nuclear Safety Commission ("CNSC"), another federal regulatory authority that may hold public hearings and that is designated by regulation, or the Agency. As discussed above, the "screening process" to determine whether or not an environmental assessment is required does not apply where the NEB, the CNSC or another federal regulatory authority is the responsible authority.

What Type of Environmental Assessment is Required?

Under the current CEAA various types of environmental assessment are contemplated including a screening, a class screening, a comprehensive study, mediation and a panel review. Under the new CEAA only two types of assessment are contemplated – a standard environmental assessment or a review panel. The Minister of Environment may refer a project to a review panel. That referral must be made within 60 days from the date on which a notice of commencement of the environmental assessment is posted on the Internet. A review panel process is not applicable to projects where the NEB or the CNSC is the responsible authority.

What Factors must be Considered in the Assessment?

The list of factors to be considered in an environmental assessment under the new CEAA is similar to the factors that must be considered in an assessment under the current Act, including the environmental effects of the project and their significance, cumulative environmental effects, mitigation measures, the purpose for, and alternatives to the project. However, the term "environmental effects" has been narrowed under the new CEAA.

The environmental effects that must be taken into account under the new CEAA are limited to effects on fish and fish habitat, aquatic species, migratory birds, other components of the environment designated in the legislation (nothing is yet designated), changes in the environment on federal lands, outside the province where the project is conducted or outside Canada and effects of changes in the environment on certain matters relating to aboriginal peoples. Where a federal authority will be required to exercise a power or duty in relation to a project, the assessment must also take into account any change in the environment that is "directly linked or necessarily incidental" to the exercise of that power or duty.

This change is clearly intended to focus federal environmental assessments on matters within federal jurisdiction.

Who Makes the Final Decision?

Under the new CEAA, at the conclusion of the environmental assessment process, generally the responsible authority must decide whether the project will cause significant adverse effects. For a project where the Agency is the responsible authority, the Minister of Environment will make that decision. If the Project will cause significant adverse environmental effects, the project must be referred to the federal Cabinet to decide whether the effects are justified in the circumstances. For pipeline projects under the NEB, the federal Cabinet will determine whether the project is likely to cause significant adverse environmental effects and whether any such effects are justified.

How Long with the Process Take?

The current CEAA contains no timelines for completion of assessments. In 2011 the federal government established timelines by regulation for certain projects subject to a comprehensive study. Under the new CEAA, all environmental assessments must be completed within a specified period of time – 365 days for a standard environmental assessment, two years for an assessment to be conducted by a review panel and 15 months for a review by the NEB. The Minister of Environment, or, in the case of an NEB project, the Minister of Natural Resources may extend a timeline by up to three months and further extensions may be granted by Cabinet. The time the proponent takes to complete any studies required for purposes of the assessments are excluded from the timelines.

Enforcement

One of the significant deficiencies that has been identified with respect to the current CEAA is the lack of enforcement mechanisms. Under the current CEAA it is left to the responsible authorities to incorporate requirements from the CEAA process into subsequent permit conditions. Any requirements that are incorporated in permits would be subject to enforcement mechanisms under the applicable statute. Any requirements or conditions or commitments that are not incorporated into subsequent permits are not enforceable.

The new CEAA requires the issuance of a decision statement at the end of the assessment process. That decision statement must include any conditions that the project proponent must comply with. Those conditions can only be in relation to environmental effects as defined in the legislation, must be directly linked or necessarily incidental to the exercise of a power or duty by a federal authority with respect to the project and must be with respect to the implementation of mitigation measures that were taken into account in the making the decision and implementation of a follow-up program.

Breach of the conditions in a decision statement is an offence and may result in a fine of up to $200,000 on a first offence or a fine of up to $400,000 on a subsequent offence. If the breach of the conditions continues for more than one day, it is considered a separate offence for each day the offence continues. A due diligence defence is available.

Public Participation

The new CEAA provides that a responsible authority must ensure that the public is provided with an opportunity to participate in the environmental assessment of a designated project. Very little specific information is provided regarding what level of public participation is contemplated. The new CEAA does state that the public must be provided with an opportunity to comment on the project during the initial screening to determine whether an environmental assessment will be required. It also states that the public must be provided with an opportunity to comment on the draft environmental assessment report.

For projects referred to a panel review and pipeline projects subject to NEB review, public participation in the review process is limited to "interested parties". An interested party is defined as a person the responsible authority determines in its opinion is directly affected by the project or has relevant information or expertise.

How is the One Project/One Process Commitment Reflected in the new CEAA?

A key objective of the new CEAA is to reduce overlap and duplication with provincial environmental assessment processes. Under the new CEAA the responsible authority must offer to consult and cooperate with certain jurisdictions, including a province, regarding an assessment of the project where that other jurisdiction also has an environmental assessment process for the project. Where the Minister considers that a provincial process would be an appropriate substitute for the federal process and the province requests substitution, the Minister must approve that substitution request. However, the Minister must retain decision-making authority at the end of the provincial process. Cabinet may exempt a project that is subject to a substituted process from the application of CEAA. The new CEAA also provides for joint review panel processes with another jurisdiction.

Draft Regulations

No draft regulations have yet been released under the Act. However, a consultation document has been released with respect to two regulations under the new CEAA – the Prescribed Information for a Description of a Designated Project Regulation and the Cost Recovery Regulations.

The first regulation will set out the information the proponent of a project is required to include in the project description that must be submitted to the Agency. This regulation would not apply to projects where the NEB or CNSC is the responsible authority. The information required in a project description will be similar to requirements for projects subject to a comprehensive study under the current CEAA, but with a focus on potential effects in areas of federal jurisdiction.

The second regulation will set out the services and amounts for which the Agency can recover costs from the proponent of a project undergoing assessment under the new CEAA. The consultation paper states that although the cost recovery authority under the new CEAA enables the Agency to recover costs for all environmental assessments, the Agency proposes to recover costs only for projects being assessed by review panel. Under the current CEAA costs are recovered for panel hearings. The proposed regulations would extend the time period during which costs can be recovered to include the period before and after the establishment of the panel. Comments on the draft regulations must be submitted by May 23.

Conclusion

The new CEAA represents a significant change in the federal government's approach to environmental assessment. It is clear that fewer projects will be subject to review and reviews that are required will focus on areas of federal jurisdiction and will be completed within specified time limits. These are welcome changes. Much speculation has occurred about the impact of these changes on environmental protection. In light of provincial environmental assessment processes and federal and provincial permit requirements, it seems unlikely that these changes will result in a significant decline in environmental protection.

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.