Getting projects built under Canada’s new impact assessment regime

Torys Quarterly: Canadian sector report

Canada’s environmental sector is evolving. A new regulatory regime has been introduced by the federal government to assess the impact of large projects on the environment, with a wide-ranging scope of focus that encompasses climate change, broad socio-economic benefits, and greater collaboration with stakeholders and Indigenous groups.

We believe that proponents who invest the time and effort in the early stages to carefully prepare for the assessment process will reap substantial benefits in their pursuit of new opportunities across Canada.

Broader assessments in Canada

For decades, federal environmental assessment has been a major part of the development of large projects across Canada, including pipelines, ports, railway yards, mines and nuclear facilities. The regime was substantially changed this past August when the new Impact Assessment Act (IAA) came into force, replacing the Canadian Environmental Assessment Act, 2012 (CEAA 2012). Key changes include: introducing a new Impact Assessment Agency; a new litmus test, based on a wide range of “public interest” factors; more emphasis on greater stakeholder and Indigenous participation; and an important new planning phase. The new regime’s broader scope has a stronger focus on the assessment of a project’s potential economic and social impacts, as well some entirely new considerations, like the positive—not just adverse—impacts of a project, sustainability, certain climate impacts and the intersection of sex and gender with other identity factors.

Elements of the new regime have been controversial (see our article “Pipeline problems persist in Canadian oil and gas”), posing genuine uncertainty for new (and transitioning) large projects across Canada—but there also appears to be a path for developing projects faster and with more stakeholder support. Project proponents that carefully manage the process from the outset may well gain a substantial competitive advantage.

Efficiency through early planning

A common reaction to substantial change of this kind is to assume that the early period of uncertainty is likely to result in administrative wheels grinding slower, in this case, leading to industry concerns that it will take even more time under the IAA to get projects built. Fortunately, the new regime contains a variety of provisions which could result in the opposite. Most notable among them is a new, initial phase, which mandates early engagement with stakeholders and detailed planning for the assessment process to come, including clarification of expected timelines. While many experienced project proponents have always made that kind of effort unilaterally, institutionalizing it through the IAA means that it is now on the Agency to implement a “measure-twice, cut once” philosophy. Even for those projects where substantial stakeholder consensus is not possible, there should be more clarity up front about the nature and extent of the assessment, which in turn will help reduce the frequency of credible later-stage claims of surprise (and the assertion that the proponent should start over on a particular subject or step).

Consistent with that spirit, the IAA also reduces the legislated default maximum timelines for a review from 365 to 300 days for Agency assessments and from 730 to 600 days for (the much more involved) panel reviews. More importantly, it eliminates the previous regime’s “clock-stopping” mechanism—in which time would regularly not count against the legislated limit—which made the default timelines illusory. As noted in Figures 1 and 2 below, the timelines in practice for panel reviews under the old regime routinely took at least several years.

Figure 1: Duration of completed review panels under CEAA 2012

Figure 2: Duration of ongoing review panels under CEAA 2012 (Prior to the IAA coming into force)

Data source: See Environmental assessments by Review Panel under CEAA 2012.

While the IAA does contain mechanisms for time extensions and suspensions, they are not automatic (as was the clock stopper) and they are balanced by mechanisms for shortening the schedule. If properly utilized in practice, those changes could make a very big difference in how quickly a project can be assessed.

Building better support

An obvious potential benefit of the earlier engagement mandated by the new regime is enhanced opportunity to engender a more collaborative relationship with stakeholders, including Indigenous groups—which in turn can facilitate better understanding and ultimately more project support. You can read more on Indigenous engagement with projects in Canada in “Investment in Canada’s power sector”. But even in those cases where stakeholder and/or Indigenous collaboration is ultimately illusive, the IAA’s express focus on the positive impacts of the project could be a game-changer. In the past, there have been very limited opportunities for proponents to deliver a more balanced overall assessment, and, correspondingly, limited potential for a more balanced reception by the public. Proponents who are conscious of that opportunity will make sure that the benefits-story now forms a central part of the narrative from the very outset, which should help give these projects a distinct advantage.

Outlook

Canadian businesses that operate internationally are constantly reminded that our regulators need to get better at making good decisions faster. Canada’s new IAA—if carefully navigated—could prove to be a step in the right direction.

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Q4 | Fall 2019: Canadian sector report
In 2019, businesses in Canada have been busy confronting—and adapting to—significant market, regulatory and legal change across every sector.