Proposed Changes to the Federal Environmental Assessment Regime and Creation of the Canadian Energy Regulator

On February 8, 2018, the Minister of the Environment and Climate Change tabled Bill C-69 (the “Bill”). The Bill has three main thrusts: (i) repeal of the Canadian Environmental Assessment Act (2012) and its replacement by the new Impact Assessment Act; (ii) creation of the Canadian Energy Regulator (the “CER”) to replace the National Energy Board, and (iii) amendments to the Navigation Protection Act, including a change in its title to the Canadian Navigable Waters Act. According to the government’s timetable, the new statute is to come into force in the spring of 2019.

The new Impact Assessment Act

The federal government is revising its entire impact assessment process and proposing major changes to it. First of all, a single entity called the Impact Assessment Agency (the “Agency”), will be responsible for performing impact assessments, contrary to the current regime under which there are three authorities potentially responsible for assessments. The scope of an assessment will be broadened to cover, inter alia, impacts on society, health and the economy, in addition to the environment. Section 63 of Part 1 of the Bill lists the factors that the Minister must consider in making a determination of the need for an impact assessment, including the extent to which the project contributes to sustainability and the impact it may have on any Indigenous group.

This provision reflects the broadened scope of the new legislative framework to be instituted by the Bill. By expressly including among the types of interests to be taken into consideration the concept of the impacts a project may have on any Indigenous group and on the rights of Indigenous peoples recognized and affirmed by section 35 of the Constitution Act, 1982, the Bill thus broadens the concept of “public interest”. This allows the government to take into consideration factors such as a project’s positive or negative economic, cultural and social impacts on any Indigenous group. This addition also includes express recognition of the rights of Indigenous peoples and is essentially a codification of the Crown’s constitutional duty to consult them.

Another change proposed by the Bill that we believe is important for project proponents is the addition of a preparatory phase for the assessment of a project, which is outlined in section 10 (1) of Part 1 of the Bill. The purpose of this preparatory phase is to allow upstream consultation regarding any project. During this preparatory phase the project proponent must present an initial description of the project so that the Agency can, at the very outset of the process, consult communities, Indigenous groups, jurisdictions and members of the public likely to be affected by the project. The Agency will base itself on these consultations in commenting on the project’s description, and the proponent will have to present a revised description of the project to reflect how it intends to respond to the questions asked during the consultation period. The purpose of the consultation is to allow all jurisdictions to have meaningful influence on the design of the project. The Agency has 180 days to provide the project proponent with a notice of the commencement of the impact assessment of the project and the results of the consultation on the initial description of the project. The length of this period marks a significant change from the current 45-day period during which the current agency can determine if a project is subject to an assessment, which includes 20 days of public consultation.

For projects that are subject to an impact assessment, three documents will be published to orient the impact assessment process: (i) a collaboration plan for the impact assessment (including a consultation and partnership plan with Indigenous peoples and a public participation plan prepared in collaboration with Indigenous peoples, jurisdictions and stakeholders), (ii) the adapted guidelines relating to the impact study, and (iii) the permit issuance plan, as applicable.

With respect to the duty to consult Indigenous groups provided for in the Impact Assessment Act it remains to be seen how this will be harmonized with the constitutional duty of the Crown to consult Aboriginal peoples recognized by the Supreme Court of Canada in Haida Nation v. British Columbia (Minister of Forests).

In addition to this duty to consult, the Impact Assessment Act also provides for the possibility of entering into agreements with Indigenous governing bodies. As the Impact Assessment Act indicates, some of these agreements will likely involve the delegation of the entire impact assessment process to Indigenous groups.

By these measures, the federal government is expressly demonstrating its intention to have Indigenous groups participate in all stages of the decision-making process and to give them more responsibilities. While there is no reference to the concept of free, prior and informed consent as recognized by the United Nations Declaration of Rights of Indigenous Peoples, the Bill represents a major milestone in the establishment of a dialogue with Indigenous groups and recognition of their rights. In this regard, it is important to underscore the federal government’s intention to integrate both scientific information and traditional knowledge of Indigenous peoples into the assessment process.

It is interesting to note that the federal government’s approach in the Bill appears to respond to the same concerns regarding public participation as the new approach proposed by the Quebec government in its draft regulation on the environmental impact assessment and review procedure for certain projects. In both cases, increased public participation is mandated as of the submission of the initial description of the project, and it is the minister responsible who decides on the relevance of comments received and who indicates to the proponent the concerns to be taken into account in preparing the impact study.

Consultations on the list of designated projects

The proposed Impact Assessment Act will include a list of designated projects established by regulation, and it has been suggested that the new list fully retain the current list of projects that are subject to an assessment. Despite the clarity and foreseeability afforded by such an approach, the federal government has expressly undertaken to modify the list of designated projects. In this regard public consultations are currently underway to gather comments from the public and establish the necessary criteria for updating the list of designated projects. A provisional list will subsequently be proposed and will be subject to another round of consultations. The comments received to date reveal certain tendencies inherent in the current list. In the eyes of many the list is overly centred on certain industries, such as mining.

Here are some examples of projects likely to be included on the new list:

  • in situ oil sands production;
  • hydraulic fracking;
  • potash mining;
  • large-scale wind-farms.

The new list should thus diversify the activities and sectors to be reviewed by the federal government. The eventual changes proposed to the list of activities that are to be subject to the assessment process will be determined based on the negative environmental impacts of a project in an area of federal jurisdiction.

Creation of the Canadian Energy Regulator

The CER will be responsible for regulating pipelines, developing energy resources and marketing energy. Thus, the CER, like the current National Energy Board (the “NEB”) will be responsible for overseeing federal, interprovincial and international energy projects. However, the CER will also, for the first time, have the power to regulate offshore renewable energy projects.

The Bill is aimed at modernizing the NEB by: (i) increasing the independence of the CER; (ii) ensuring greater foreseeability and rapidity in making decisions; (iii) enhancing safety and environmental protection; (iv) ensuring a more inclusive process; and (v) promoting increased participation of Indigenous communities.

Here are some examples of the measures proposed in the Bill in this regard:

  • separation between the decision-making function of the CER and its administrative function;
  • the CER will assess non-designated projects, and the process will take 300 days rather than 450 days;
  • the Minister will have the power to make a conclusive, non-appealable decision on export licences;
  • at least one member of the board of directors and one of the CER’s commissioners must be a member of a First Nation, a Métis or an Inuit; and
  • in making its decisions the CER must take into account any adverse effect that the project may have on the rights of Indigenous peoples.

Proposed changes to the Navigation Protection Act

The major proposed change to the existing statute, apart from the change in its title to the Canadian Navigable Waters Act, is the reconfiguration of certain powers of the Minister of Transport and the institution of new procedures for constructing works in, across or over navigable waters. In this regard there will be three types of works involving navigable waters: (i) major works, the construction of which will require the approval of the Minister of Transport, (ii) works listed in a schedule to the statute, for which approval will also be required, and (iii) other works which are subject to a public notice process.

The final versions of the Bill and the draft regulations thereunder that will be published over the coming year in conjunction with the consultation process will have to be closely scrutinized. For more information in this regard, please contact one of the members of our team.

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