Environmental Update and Budget Highlights



Budget proposes environmental assessment reforms

On March 29, 2012, the federal government tabled its budget, titled "Economic Action Plan 2012." Responsible natural resource development is a theme in the budget. It indicates that Canada’s existing environmental assessment (EA) system needs comprehensive reform so that major economic projects are reviewed in a timely and transparent manner, while effectively protecting the environment. To this end, the federal government has committed to propose legislation that would improve the EA system, in part by implementing "one project, one review" for major economic projects. According to the budget, the government will focus on the following four main areas to streamline the review process for major economic projects:

  1. Making the review process more predictable and timely (e.g., the budget indicates that the “fixed” beginning-to-end timelines for panel reviews will be 24 months, and for standard EAs, 12 months).
  2. Reducing duplication and regulatory burden (e.g., authority to recognize provincial EAs as a substitute for, or equivalent to, federal EAs).
  3. Strengthening environmental protection.
  4. Enhancing consultations with Aboriginal peoples. In that regard, the budget proposes allocating $13.6 million (over two years) to the Canadian Environmental Assessment Agency to support consultations with Aboriginal peoples related to projects assessed under the Canadian Environmental Assessment Act (CEAA).

The Major Projects Management Office initiative receives praise in the budget for helping to transform the CEAA process for major natural resource projects by shortening the average review times to 22 months, from 4 years. The budget proposes to allocate $54 million (over two years) to continue this initiative.

Other proposed environmental measures in the budget include the following:

  • allocating $1 million (over two years) to Environment Canada to expand the Metal Mining Effluent Regulations to non-metal diamond and coal mines.
  • allocating $50 million (over two years) to continue implementing the Species at Risk Act, including by providing conditions for the recovery of Canada’s species at risk.

For further information, please see the budget.


Superior Court stays remediation orders because of creditor proceedings

On March 9, 2012, the Ontario Superior Court decided several motions regarding five Ontario properties formerly owned by Nortel Networks Corporation, including one property in which Nortel retained a partial interest. The properties had been contaminated as a result of historical manufacturing on the properties. After Nortel’s filings under the Companies’ Creditors Arrangement Act (CCAA), the Ontario Ministry of the Environment (MOE) issued orders, and posted (for public comment) draft orders, under the Environmental Protection Act (EPA) against Nortel requiring (or requiring, if issued) the investigation and remediation of four of the contaminated properties. Nortel brought a motion seeking, among other things, the Court’s direction that Nortel cease performing any remediation of the properties and the Court’s declaration that any remediation claims brought against Nortel regarding the properties be subject to the CCAA procedure. Essentially, the MOE took the position that these orders did not create a debtor/creditor relationship and were not subject to the CCAA procedure.

The Court found that the effect of these remediation orders (if issued) would be to require Nortel to prepare a remedial action plan, resulting in Nortel’s incurring a financial obligation. Given this finding, the Court concluded that the EPA was superseded by the CCAA because of the conflict between the two regulatory regimes. Therefore, the Court, among other things, granted Nortel authorization to discontinue performance of any remediation activities at the properties, and made a declaration that any remediation orders against Nortel (related to these properties) be subject to the CCAA procedure.

For further information, please see the decision.

Court of Appeal finds an adverse effect without significant harm to the natural environment

On March 16, 2012, the Ontario Court of Appeal released its decision to dismiss Castonguay's appeal in Ontario (Environment) v. Castonguay Blasting Ltd. In 2007, while blasting at a highway construction site in Marmora, Ontario, Castonguay sent rock debris flying through the air. The debris landed on a nearby house and vehicle, causing significant property damage (for which compensation was provided). Castonguay reported the incident to the contract administrator, who subsequently reported it to Ontario’s Ministry of Labour and Ministry of Transport. However, the incident was not reported to the MOE. In October 2009, Castonguay was charged with failing to report the discharge of a contaminant into the natural environment that causes or is likely to cause an adverse effect, under section 15(1) of the EPA. Castonguay was initially acquitted of this offence by the Ontario Court of Justice, but that decision was reversed by the Superior Court of Justice. On the appeal of that decision, Court of Appeal considered, among other things, whether damage to property without any significant harm to the natural environmental (i.e., the air, land or water of Ontario) constituted an adverse effect. Under the EPA, an "adverse effect" is defined as including "damage to property." The majority of the Court found that significant harm to the natural environment was not required in addition to damage to property and, thus, concluded that Castonguay should have reported the incident to the MOE.

For further information, please see the decision.

MOE amends guideline for GHG emissions reporting

The MOE recently provided notice of amendments to the Greenhouse Gas (GHG) Emissions Reporting Guideline (which is incorporated by reference into Ontario Regulation 452/09). The amendments include clarifications regarding the emissions factors, equations and sampling and analytical methods to be used in the standard GHG quantification methods, which must be used (in certain circumstances) under Ontario Regulation 452/09.

For further information, please see the Environmental Registry and the Guideline.


Governments of Canada and Alberta to implement oil sands monitoring system

The Canadian government recently announced that, during 2012, it and the Alberta government will increase environmental monitoring (including air, land, water and biodiversity monitoring) in Alberta’s oil sands region. The "Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring" commits the governments to an environmental monitoring program for this region. This program is designed to facilitate increased sampling within the oil sands region and to provide an improved understanding of the long-term cumulative effects of oil sands development.

The three-year implementation plan is scheduled to begin in the spring of 2012, at which time the federal and provincial governments will increase sampling frequency and the number of sampling parameters and locations. The implementation plan builds on the "Integrated Oil Sands Environment Monitoring Plan" released by Environment Canada in July 2011 and is expected to be consistent with the Alberta government’s plans for a province-wide environmental monitoring system. Annual progress reports will be prepared for the first three years of monitoring, with an external scientific peer review of the program at the end of the third year. Following that, a full external, scientific review of the new program will be conducted every five years.

For further information, please see the news release.

Alberta Environment and Water publishes revised offset project guidance

On February 27, 2012, Alberta Environment and Water published a new version of the Technical Guidance for Offset Project Developers (the Guidance). The purpose of the Guidance is to assist market participants (including project developers) in implementing GHG emissions offset projects for use in the Alberta offset system. Under that system, facilities whose GHG emissions are regulated under the Specified Gas Emitters Regulation can offset their own emissions by purchasing credits generated by Alberta offset projects. Significant changes incorporated into this version of the Guidance include:

  • clarification regarding the deadlines for claiming historical credits in the Alberta offset system;
  • clarification on the credit start date and credit duration periods for offset projects;
  • a new requirement whereby offset project developers must complete a statutory declaration as part of the offset project registration starting April 1, 2012; and
  • clarification on project record requirements for project developers and third party verifiers.

For further information, please see the Guidance.

North America

Western Climate Initiative released final offset project review and approval recommendations

The Western Climate Initiative (WCI) − comprising British Columbia, Manitoba, Ontario, Quebec and California − recently released final recommendations for the standards and processes that must be used for GHG emissions offset projects to obtain tradable emissions credits in WCI jurisdictions. In doing so, the final recommendations identify the critical elements of offset project approval that WCI partners believe will lead to high-quality offset credits that can be exchanged across the region.

For further information, please see the WCI.

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