Contributed by Robert Lyman © 2017

Introduction

On June 29 2017, the federal government released a discussion paper on the review of environmental and regulatory processes. The paper included several suggestions for reform of the current environmental assessment system, including a broadening of the scope of assessments to include the cumulative effects of economic activity in the regions affected; further broadening it to include not only environmental issues but also economic, social and health issues; adding a new national interest, or policy, determination; initiating much more extensive “engagement and planning” both by project proponents and governments; expanding the opportunity for public involvement through eliminating the “standing” test used by the National Energy Board; using gender-based analysis in assessments, integrating indigenous traditional knowledge more extensively in assessments; and sharing administrative authority and management responsibility with indigenous peoples.

The scope and number of the changes proposed are unprecedented. As someone who worked for many years in the federal government, I have observed the changes made in the federal environmental assessment and review system since its beginning. I therefore have some appreciation for the issues involved and the consequences if the government embraces all of the changes now under review. My guess is that there are fewer than a thousand people in Canada who fully understand what is at stake. It would be a disservice to try to analyze all the complex questions involved in a short set of comments. I offer instead a personal perspective on the overall significance of the changes.

The Value of Environmental Assessment and Review

There are few, I think, who would question the value of environmental assessment and review as an integral part of the public policy process and of the regulatory reviews of specific projects. Such reviews are an essential part of the “due diligence” that government officials and political decision-makers should carry out. The Canadian public values environmental quality and it, I believe, also agrees that governments should be proactive in identifying potentially adverse environmental impacts before they occur, so that the government can decide whether to allow development to proceed, and if so, under which terms and conditions.

Environmental assessment has evolved considerably since Canada and the United States began performing such assessments or requiring project proponents to perform them in the 1970’s. Initially in Canada, environmental assessment was conducted under the terms of a federal guidelines order intended to add a “best practices” component for this type of public interest review. Later, after a series of court judgments, the requirement to conduct an environmental assessment, and the standards governing such assessments, were enshrined in legislation. Thereafter, the courts, more than governments, became the arbiter of whether an assessment had been done in such a way as to meet the requirements of the Canadian Environmental Assessment Act.

It is notable that no such legislative requirements apply to the other public policy considerations that governments take into account before deciding on important matters. No law requires that officials or project sponsors conduct analysis of the economic effects, the financial or cost-benefit effects, the effects on groups and regions, the effects on safety and security, the effects on health, the effects on international relations or any of the large number of other considerations that typically are included in a memorandum to Cabinet. No rule requires that the public be informed, consulted and given an opportunity to offer its detailed comments on other policy considerations. No court decides whether the procedures used to find out important information have been properly followed or, when judging that they were not, is authorized to set aside the government’s decision. Environmental assessment and review thus has obtained an almost pre-eminent place in the public policy and regulatory regime, not because Canadians decided by ballot that environmental considerations should outweigh all others, but because there is a law that governs what will be done and how it will be done.

There are some who believe that all government deliberations and analysis, like those that apply to environmental considerations, should be open to public scrutiny, with ample opportunity for and time spent on public hearings and debate. Whatever the merits of this view in terms of a more “direct “ democracy, these requirements do not apply now under our still mostly representative style of democracy. The federal proposals for change would move us firmly in a new direction.

Problems Have Arisen

Over the period since the late 1980’s, the actual process of environmental assessment and review has become very detailed and complex. A great deal of time and attention is spent on determining the scope of the review, whether it merits only a straight-forward screening, a more comprehensive review or a full assessment including the establishment of an independent panel. While those who value environmental quality have welcomed this evolution, there have also been those who have used the system as a means to delay, hinder and ultimately defeat any project they opposed. The requirement for public engagement has provided an opportunity for hundreds and sometimes thousands of people to attend hearings, not because they have some additional scientific evidence that bears upon the merits of the project, but because the hearing offer a way indirectly to hold a public plebiscite on the overall acceptability of the project. In certain hands, the process has ceased to be about scientific assessment of a project’s effects; it has become a weapon.

The practical effect of ever more requirements for environmental assessment and review and more public involvement has been an increase in the duration of reviews, in the demands on federal officials, in the costs incurred by project proponents and in the uncertainty associated with the outcomes. It is difficult to find reliable data on the duration of federal and provincial reviews, but it is clear that many took longer than 18 months to complete and some took over twice that long. Considering that the reviews do not formally commence until the regulating agency determines that the application is complete (i.e. has all the information, including environmental studies already done), this seems excessive.

This poses particular problems for the energy and minerals resource industries. Many energy and mineral commodities trade in highly cyclical markets, where the supply and demand conditions and the resulting prices can change sharply over time, and in unpredictable ways. Those who invest in major projects costing billions of dollars face certain “windows of opportunity” in the cycles during which the economic conditions favour the early success of a project. If regulatory approvals, extended because of the burdens imposed by prolonged environmental assessment and hearing processes, delay projects for years, these windows of opportunity can be missed. The recent cancellation by Petronas of a proposed $36 billion LNG project in British Columbia illustrates the risks of this.

Regulatory Efficiency

Perceiving inefficiencies in the environmental assessment process as a hindrance to economic development, the federal government included provisions in its Budget implementation bill in the spring of 2012 to replace the former assessment process with a new one set out in the Canadian Environmental Assessment Act 2012 (CEAA), which Parliament passed in June 2012. Under the new Act, the environmental effects of a project to be taken into account are a change that may be caused to a component of the environment under federal jurisdiction, a change that may be caused on federal lands or outside the province where the project is to be constructed, and an effect on aboriginal peoples of a change to the environment. If the project, to proceed, requires a federal department, agency or regulatory body to exercise a power or perform a duty or function (such as issuing a permit), then the definition of environmental effects includes “certain changes to the environment directly linked or necessarily incidental to that exercise or performance, as well as socio-economic effects of such a change”. The CEAA 2012 definition of environmental effects is narrower than the definition in the former Act, where an environmental effect was any change that the project would cause in the environment, as well as socio-economic effects of such a change. The more narrow definition of environmental effects in CEAA 2012 slightly limited the power of the Minister of the Environment to submit an environmental assessment to a review panel.

CEAA 2012 also imposed time limits for environmental assessments. Most standard assessments must be completed in one year. When a review panel conducts the environmental assessment, the entire process is limited to two years, although certain exceptions are allowed that have resulted in much longer reviews (e.g. the National Energy Board assessment of the Trans Mountain Expansion Project). Further, while in the past almost any member of the public was able to appear before a review panel to give his or her views on a project, CEAA 2012 limits those permitted to participate at hearings to “interested parties” which are persons directly affected by the proposed project, as well as those with relevant information or expertise. In fact, these limits have rarely been stringently applied, and any member of the public is still able to submit written comments to the review panel for its consideration. The net effect of the CEAA changes was to reduce the scope of assessment somewhat and to impose time limits with the objective of improving the efficiency of the regulatory process.

Concerns About the Future

The extensive changes to the federal environmental assessment process now under consideration would “turn back the clock” on the changes made in the environmental assessment regime as a result of CEAA 2012. However, they would go much further in expanding the scope and complexity of the assessment process.

Broadening the scope of environmental assessment to include analysis of the economic, social and health issues essentially would make these considerations subsidiaries of the environmental assessment process. One wonders whether, for example, the future conduct by officials of economic analysis on a project would henceforth be subject to the same rules that now govern the procedures and processes of environmental assessment, including granting the courts the power to assess whether the economic assessment had been carried out in a way that met legislative and judicial standards. Would the development of environmental policy frameworks, such as the Climate Change Policy Framework, mean that henceforth the economic, social and health analysis would simply become secondary considerations in the attainment of international climate objectives?

The addition of more processes to the ones already included in environmental assessment would also represent an unprecedented change. These include the proposed national interest or policy review, conducted mainly by federal officials but with extensive public consultations and aboriginal engagement; the addition of a potentially lengthy planning stage; the use of a new system of gender-based analysis that seems unclear in its intent and would certainly take time for officials and project sponsors to master; and redesigning regulatory processes so that aboriginal organizations have much more authority and control. Eliminating the “standing” test used by the National Energy Board and other agencies seems like an invitation to all and sundry to “pile on” in their opposition to every project, filling every hearing room with hundreds of opponents simply repeating the same message.

It seems evident that these changes, taken together, would considerably lengthen and complicate the environmental assessment process. For project opponents, it would create an extensive new set of opportunities to delay and block almost every major project. For project proponents, it would make the process far more costly, resource-intensive and unpredictable.

Would this really serve the Canadian public interest? If not, whose interest would it serve?

For further reading, see Robert Lyman’s summary of the Environmental & Regulatory Reviews discussion paper and his commentary of the use of aboriginal “traditional knowledge” in environmental regulation.

The Government of Canada is seeking public comments on the Environmental & Regulatory Processes discussion paper until August 28, 2017. Read the discussion paper and make YOUR comments heard at Government of Canada Environment and Regulatory Processes.