Further troubles lie ahead as Ottawa’s attempt at modernizing major resource project approval processes reveals a divided Canada

Further troubles lie ahead as Ottawa’s attempt at modernizing major resource project approval processes reveals a divided Canada

By Darrell Stonehouse

June 29, 2017, 1:21 p.m.

http://www.jwnenergy.com/article/2017/6/further-troubles-lie-ahead-ottawas-attempt-modernizing-major-resource-project-approval-processes-reveals-divided-canada/

Kinder Morgan tanker at terminal

Image: Kinder Morgan Canada

 

Call it an exercise in herding cats.

Only one year into the federal government’s efforts to reshape Canada’s environmental and regulatory processes surrounding resource development, and it’s already revealed a country deeply divided on how to assess environmental concerns with new projects and how to regulate industry to mitigate any issues.

The federal government launched its multi-department review last June after instituting a temporary system in January for projects already under environmental assessment. The goal is to replace the environmental assessment legislation put in place by Stephen Harper’s Conservatives in 2012, while modernizing the National Energy Board (NEB), Fisheries Act, and Navigation Protection Act.

The rationale for the review is to “restore Canadians’ trust in environmental assessments,” said Catherine McKenna, the federal minister of environment and climate change.

“The review of Canada’s environmental and regulatory practices will ensure that decisions are based on science, facts and evidence,” added Kirsty Duncan, the federal minister of science.

Over the last year, the government has been gathering submissions and holding public hearings to get input from Canadians across the country. In early April, the expert panel reviewing the environmental assessment process released its recommendations. A similar report concerning the modernization of the NEB was released in mid-May.

The preliminary results from the environmental review show the challenges of trying to balance environmental stewardship with industrial growth.

“Views about federal environmental assessment across the various interests ranged from support to all-out opposition,” the environmental panel said in its report to the government.

The view from industry

Industry was looking for a number of things from the review, including assurances that any new regulations wouldn’t further harm the country’s competitiveness.

“Canada is competing globally for capital investment in our oil and gas resources, and it is imperative for the Canadian economy that Canada remain competitive with other jurisdictions,” Jim Campbell, Cenovus Energy’s vice-president of government and community affairs, told the task force on behalf of his company.

Campbell pointed to a recent study and survey showing the Canadian industry is falling behind competitors when it comes to competing for capital. “Primary reasons cited Canada’s decline include regulatory duplication and inconsistencies and complexity of environmental regulations,” he noted.

In its submission to the task force, Suncor Energy, like most others from industry who offered input, said the federal review process should dovetail with, rather than overlap, provincial and local review processes. The process should, “accent, not duplicate, provincial reviews,” said Suncor. “One project, one assessment. Duplicate reviews do not add additional protections and can add years to project applications.”

The federal assessment “should be a process to assess residual environmental risks in areas of federal jurisdiction,” Suncor added.

Cenovus, with most of its primary assets in Alberta, agreed primary responsibility for environmental assessments should remain with the provinces.

“Local regulators have the experience and technical expertise to best evaluate projects, work with local communities and perform follow-up monitoring and compliance,” noted Campbell.

Campbell also said federal and provincial environmental assessment processes should be streamlined by allowing for substitution and equivalency agreements based on the principles of the best-placed regulator to do the work and a single-window approach.

When it comes to addressing First Nations’ concerns, Suncor said the federal government, rather than industry, must take a leadership role, pointing out that the review “must ensure the Crown is upholding its duty to consult.”

“Proponents have the responsibility to support the Crown through direct engagement and partnership with affected communities, incorporating traditional knowledge through applications and developing projects in a sustainable manner,” Suncor added.

The oilsands giant said the people and communities closest to projects should be at the front of the line when it comes to consultations in environmental assessments.

“Reviews must allow those most directly affected by the outcome of a particular project to have the greatest opportunity to participate and have a voice in the process,” it noted. “Input from affected stakeholders can get diluted when the process is used for purposes other than gathering information on a specific project.”

Suncor and other resource companies and associations also said they don’t believe the review process should be hijacked by groups wanting to debate larger public concerns outside the boundaries of the project. Governments should first set public policy direction on these broader issues like climate change, and then the review process should ensure public policy standards are met.

“The review process is not the appropriate venue for debating broader public policy,” the company said.

Another key element for industry and provinces with resource-based economies in the review process was ensuring the designated projects section of the Canadian Environmental Assessment Act, 2012 remained in place. Projects including minerals mining (such as potash), linear developments (transmission lines and highways) that do not cross provincial boundaries, extraction of non-potable groundwater, in situ oilsands developments and natural gas facilities were removed from the list of projects requiring federal assessments in the 2012 legislation.

“Removing these projects from federal [environmental assessment] review saved time and cost by greatly reducing unnecessary duplication of [assessments] and other regulatory processes, reducing red tape for proponents while maintaining robust provincial environmental safeguards,” said the government of Saskatchewan in its submission. “The province advocates for the exclusion of such projects from federal review, recognizing mature and effective provincial environmental regulatory review processes.”

Green groups, First Nations look for greater participation in process

While industry looked to streamline the environmental assessment process and provide certainty to investors, environmentalists and First Nations looked for greater input into the process and for the federal government to expand the list of designated projects that require federal approval. Many also requested a climate test be included in the process.

West Coast Environmental Law said it was looking for a “next-generation assessment law” that accounted for the economic, ecological and social aspects of sustainability, that respected First Nations authority and governance, that provided for full public participation, and that connected the assessment, decision-making and action of different levels of government.

They also wanted the law to “address the causes and effects of climate change, include strategic and regional assessment as fundamental components, and to require appropriate assessment of the thousands of smaller projects currently not being studied.”

“This isn’t the time to make small adjustments to a deeply flawed process—we need a new law that ensures the health of Canadians and the environment, and this is our chance to get it right,” said Stephen Hazell, the director of conservation and general counsel at Nature Canada.

Recommendations favour expansion of federal role in assessments

The initial report from the expert panel is promising many of the big changes environmentalists and others who submitted opinions wanted. The first is a major expansion in the assessment process beyond the environmental impacts of a project.

“We outline that, in our view, assessment processes must move beyond the bio-physical environment to encompass all impacts likely to result from a project, both positive and negative. Therefore, what is now ‘environmental assessment’ should become ‘impact assessment,’” the panel said. “Changing the name of the federal process to impact assessment underscores the shift in thinking necessary to enable practitioners and Canadians to understand the substantive changes being proposed in our report.”

This new assessment process would cover what the panel calls the “five pillars of sustainability: environmental, social, economic, health and cultural impacts.”

While industry said it would like to see public input limited to those most affected by the project, the panel also sided with environmental groups wanting to see broader public input. The panel also said that more meaningful public participation in the assessment process is a must.

“An overarching criterion of public participation opportunities in impact assessment processes is that these opportunities must be meaningful,” the report added. “A meaningful participation process needs to have the inherent potential to influence decisions made throughout the assessment, provide inclusive and accessible opportunities for early and ongoing engagement from the public and indigenous groups, and provide the capacity required for active participation in the engagement.”

The panel said current rules regarding public participation are lacking and have been perceived as having been designed to “limit public participation in the assessment process.”

The panel believes the NEB’s adoption of the “standing test” has greatly hindered trust in its assessments.

“The degree to which this test has limited participation is evident through NEB participation data. The outcome of this is not an efficient assessment process or timely incorporation of public input into a decision-making process,” the panel said. “In the case of the Trans Mountain Expansion project review, a ministerial panel was convened after the NEB assessment process was completed, at least in part to hear from those who felt shut out of the initial process. In short, limiting public participation reduces the trust and confidence in assessment processes without bringing any obvious process efficiency.”

“The panel recommends that…legislation require that [an impact assessment] provide early and ongoing participation opportunities that are open to all,” the report said. “Results of public participation should have the potential to impact decisions.”

The expert panel also questioned the need for time limits on the review process, suggesting that instead, the time frame of the review process be project-specific. The current process, put in place in 2012, requires environmental assessments of projects that occur on federal lands, such as pipelines, to be completed within one or two years, depending on the project’s size and complexity.

“This has not met the objective of delivering cost- and time-certainty to proponents,” the report said. “Our recommended approach seeks to build public confidence in the assessment process. We believe that public trust can lead to more efficient and timely reviews. It may also support getting resources to market.”

The expert panel also recommended a number of ways to increase First Nations participation in the assessment process, including implementing the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), “especially with respect to the manner in which environmental assessment processes can be used to address potential impacts to potential or established aboriginal or treaty rights.”

The panel recognized that there are broader discussions that need to occur between the federal government and indigenous peoples with respect to nation-to-nation relationships, overlapping and unresolved claims to aboriginal rights and titles, reconciliation, treaty implementation and the broader implementation of UNDRIP. According to the panel, many of these discussions will be necessary prerequisites for the full and effective implementation of the recommendations contained in the report.

Among its recommendations regarding indigenous people, the panel suggested that indigenous peoples be included in “decision-making at all stages of the assessment process, in accordance with their own laws and customs.”

It also suggests First Nations be funded adequately to allow meaningful participation in the process and be given the time to review information.

The panel report defines the criteria for the type of projects that should be federally reviewed and limits the criteria of projects that are included for federal review in the designated projects list.

“Many participants favoured the continued use of a project list approach to trigger federal assessments because it is predictable and clear and places the focus on major resource projects,” wrote the panel.

“Requiring an assessment for projects with minor impacts was described as too burdensome and time-consuming for proponents and lacking proportionality. Participants also said, however, that the current project list is too focused on certain industries, such as mining, and should be revisited to ensure that the list more accurately reflects projects with the highest potential for adverse effects, with some participants indicating that in situ oilsands projects and hydraulic fracturing activities should be included.”

The committee recommended only projects that affect federal interests should be included on the list. This differs from the current approach that includes projects that may not affect matters of federal interest. And it said there should be an appropriate threshold for effects on federal interests so that a trivial impact does not trigger an assessment.

“A new project list should be created that would include only projects that are likely to adversely impact matters of federal interest in a way that is consequential for present and future generations,” said the committee.

On the issue of government jurisdiction, there was widespread support for the idea of “one project, one assessment.”

However, a key goal of the assessment process is to leverage the knowledge of all government levels.

“In Canada, many jurisdictions have the expertise, knowledge, best practices and capacity to contribute to impact assessments,” said the panel. “For example, the federal and provincial governments may focus on closely related issues, such as impacts to water quality versus impacts to a fishery. Yet indigenous groups also have relevant knowledge on these topics related to the practice of their aboriginal and treaty rights, their traditional and ongoing land use, and their laws, customs and institutions. Similarly, municipalities are the custodians of land use and the full range of local impacts that affect residents and their communities.”

The committee said it believes the best way to connect all these areas of expertise is through a co-operative approach.

“To date, the best examples of co-operation among jurisdictions have been joint-review panels backed up by general co-operation agreements between Canada and many provinces,” said the committee. “As such, expanding the co-operation model to include all relevant jurisdictions is the preferred method to carry out jurisdictional co-ordination.”

Climate change a sticky issue

The expert panel said the issue of climate change has proved difficult to address under existing environmental assessment regulations.

“Current processes and interim principles take into account some aspects of climate change, but there is an urgent national need for clarity and consistency on how to consider climate change in project and regional assessments,” it said.

The panel said criteria, modelling and methodology must be established to assess a project’s contribution to climate change, consider how climate change may impact the future environmental setting of a project, and consider a project’s or region’s long-term sustainability and resiliency in a changing environmental setting.

Industry is concerned the issue of climate change has sidelined project assessments and turned them into debates over government policy. The panel addressed this issue by recommending the federal government lead a strategic impact assessment or similar co-operative and collaborative mechanism on the Pan-Canadian Framework on Clean Growth and Climate Change to provide direction on how to implement the framework and related initiatives in future federal project and regional assessments.

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on June 29, 2017, in diamonds, economic impact, oil, other minerals, political, potash, uranium and nuclear. Bookmark the permalink. Leave a comment.

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