Bill C-38 (the Jobs, Growth and Long-term Prosperity Act) (Bill C-38) received royal assent on June 29, 2012. This statute amended several federal environmental statutes and substantially reformed the federal environmental assessment process (Assessment Process). It repealed the former Canadian Environmental Assessment Act (S.C. 1992, c. 37) (Former Act) and replaced it with the Canadian Environmental Assessment Act (2012) (CEAA 2012) which came into force by order of the Governor in Council on July 6, 2012.

Simplified List of Designated Projects

Under the CEAA 2012, projects that include a designated "physical activity" are subject to the new environmental Assessment Process. The list of such designated activities is set out in the new Regulations Designating Physical Activities (SOR/2012-147) which was published in the Canada Gazette on July 18, 2012 (RDPA). It includes major industrial activities that were subject to a comprehensive study under the Former Act.

By way of example, the construction, operation, decommissioning and abandonment of the following facilities are designated under the RDPA and thus subject to the new Assessment Process:

  • a hydroelectric generating station with a production capacity of 200 MW or more;
  • an oil refinery with an input capacity of more than 10,000 m3 per day;
  • a mine with a production capacity greater than the threshold designated by regulation;
  • a pulp and paper mill;
  • a facility for the manufacture of chemical products with a production capacity of 250,000 tons per year or more;
  • a facility used exclusively for the treatment, incineration, disposal or recycling of hazardous waste;
  • a marine terminal designed to handle vessels larger than 25 000 DWT.

Moreover, the Federal Minister of the Environment (Minister) has the power to require that any physical activity be subject to the Assessment Process even though it is not designated in the RDPA if, in his opinion, this activity may cause adverse environmental effects or raise public concerns related to those effects. This power, however, cannot be exercised if the activity has already begun and, as a result, the environment has been altered. Nor can it be used if a federal authority has already permitted the physical activity to be carried out, in whole or in part.

Streamlined Assessment Process

Projects subject to the Assessment Process will now be under the responsibility of one of the following authorities (Responsible Authority) as established in the RDPA:

  • the Canadian Environmental Assessment Agency (Agency);
  • the Canadian Nuclear Safety Commission (CNSC);
  • the National Energy Board (NEB), or
  • a federal authority that performs regulatory functions and that may hold public hearings.

The new Assessment Process includes the following steps, depending on the nature of the project concerned.

  1. Screening

Designated projects that are under the responsibility of the Agency will first be required to undergo a screening process.

To this end, the proponent must provide the Agency with a detailed description of the designated project including the information required under the Prescribed Information for the Description of a Designated Project Regulations (SOR/2012-148) published on July 18, 2012.

Once it has received the detailed description of the project, the Agency posts a notice on its website inviting the public to comment on the project. Within 45 days after the posting of the notice, the Agency must complete the screening and decide whether or not an environmental assessment is required in respect of the project.

This preliminary process does not, however, apply to projects that are under the responsibility of the CNSC, the NEB or another federal authority, which projects are automatically subject to the new environmental Assessment Process.

  1. Assessment by the Responsible Authority

When an environmental assessment is required, the Responsible Authority must notably analyze the project's environmental effects, including those of malfunctions or accidents that may occur, as well as any cumulative impacts related to other activities that have been or will be carried out. The Responsible Authority must also take into account comments from the public, though it is not required to hold formal public hearings.

Unlike the Former Act, the environmental effects that must be taken into account in the environmental assessment are limited to the components of the environment that are within the legislative authority of the federal government, including fish, fish habitat, aquatic species, migratory birds, federal land, Aboriginal communities and extra-provincial environmental effects. For some projects, the environmental assessment will also take into account other factors, including the environmental impacts that are directly linked or necessarily incidental to a federal authority’s exercise of a power or performance of a duty in relation to the project.

If necessary to complete its assessment, the Responsible Authority may require the proponent to undertake additional studies or to collect other necessary information.

  1. Assessment by a Review Panel

Alternatively, the Minister may decide to refer the environmental assessment to an environmental assessment review panel (Review Panel) based on various considerations, including the significance of the potential adverse environmental effects of the project or of public concerns in this regard.

The Review Panel may be constituted jointly with provincial or foreign authorities. The Review Panel must hold public hearings on the project and also has the power to subpoena witnesses and to compel them to produce documents.

  1. Possibility of Delegation, Substitution or Exclusion

The CEAA 2012 authorizes the Responsible Authority to delegate the carrying out of any part of the environmental assessment to various bodies, including a provincial agency responsible for carrying out such studies (for example, Québec’s Bureau d’audiences publiques sur l’environnement (BAPE)).

Moreover, on application by a provincial government and subject to certain conditions, the Minister must approve the substitution of the provincial equivalent that meets selected criteria established in the CEAA 2012 for the federal environmental Assessment Process. This substitution may apply in respect of a designated project or a class of designated projects, but is not allowed in respect of projects for which the Responsible Authority is the CNSC or the NEB, or those for which have been referred to the Review Panel.

Despite the delegation or substitution of the environmental assessment in favor of a provincial system, the federal authority remains in charge of making a final determination regarding the acceptability of the project.

Under certain conditions, the federal government may also exempt a designated project from the application of the CEAA 2012 if it is satisfied that the provincial system is equivalent to the federal Assessment Process.

  1. Decision Making

Upon completion of the environmental assessment, the Responsible Authority or the Minister, in the case of an assessment made by the Agency (Decision Maker), must determine the severity of environmental effects that the project is likely to cause, taking into account the implementation of any mitigation measures it considers appropriate.

If the Decision Maker is of the view that the project is likely to cause "significant adverse environmental effects," the project must then be submitted to the Governor in Council, who must determine whether these effects "are justified in the circumstances." The CEAA 2012 gives broad discretion to the federal government in this regard.

If the effects are not considered significant adverse effects or if these effects are deemed justified, the Decision Maker must issue to the proponent a decision statement that sets out any mitigation measures or a follow-up program that must be implemented by the proponent (Decision Statement).

If the Assessment Process is conducted by a Responsible Authority, the Decision Statement must be issued within 365 days from the beginning of the Assessment Process, with a few exceptions. If the Assessment Process is referred to a Review Panel, the time limit is two years.

The Decision Statement is equivalent to a permit issued by the Decision Maker. The proponent must comply with the conditions set out therein, failing which it exposes itself to administrative orders, injunctions and fines of up to $400,000. Each day on which the offence continues constitutes a separate offence. Prosecution for such an offence may be instituted at any time within two years after the day on which the Minister becomes aware of the alleged offence.

It is important to note that the project may be subject to additional conditions under other applicable environmental laws. In this regard, the CEAA 2012 provides that a federal authority cannot exercise any power or perform any duty or function pursuant to the federal statutes that would permit a project to be carried out until the Decision Statement has been issued to the proponent. Hence, the federal permits which are required to carry out a designated activity cannot be obtained before the conclusion of the federal environmental Assessment Process.

  1. Projects on Federal Lands or Outside Canada

The CEAA 2012 also contains provisions in respect of the projects that do not include a designated activity but would be carried out on federal lands or outside Canada.

Indeed, the federal authorities must not carry out projects or provide financial assistance for the purpose of enabling such a project to be carried out until they have determined whether the project is likely to cause significant adverse environmental effects. When applicable, the project must not be carried out by the federal authority and financial assistance must not be provided unless the Governor in Council decides that the environmental effects are justified in the circumstances.

Transitional Provisions

The new Assessment Process established by the CEAA 2012 does not apply to a designated project if:

  • construction of the project was commenced before the CEAA 2012 came into force;
  • the project was permitted to be carried out under the Former Act; or
  • the Responsible Authority had decided under the Former Act that an environmental assessment was likely not required.

In addition, screenings and comprehensive studies already underway when the CEAA 2012 came into force will be completed under the Former Act. Projects that must be reviewed by a Review Panel shall be continued under the CEAA 2012.

Amendments to Other Federal Environmental Statutes

Bill C-38 amended several other federal environmental statutes, including the Fisheries Act, R.S.C. 1985, c. F-14. One of the major changes to this statute relates to section 35, which prohibits carrying on any work or undertaking that results in the harmful alteration, disruption or destruction of fish habitat, unless authorized to do so.

The scope of this prohibition will be limited by Bill C-38 in order to only apply to activities that cause "serious harm to fish that are part of a commercial, recreational or Aboriginal fishery, or that support such a fishery." This modification will come into force on the date to be fixed by order of the Governor in Council.

Other environmental statutes amended by Bill C-38 include the following:

  • the Kyoto Protocol Implementation Act, which is repealed;
  • the National Round Table on the Environment and the Economy Act;
  • the Antarctic Environmental Protection Act;
  • the Canada National Marine Conservation Areas Act;
  • the Canada National Parks Act;
  • the Canada Oil and Gas Operations Act;
  • the Canadian Environmental Protection Act, 1999;
  • the Canadian Polar Commission Act;
  • the First Nations Commercial and Industrial Development Act;
  • the First Nations Oil and Gas and Moneys Management Act;
  • the National Energy Board Act;
  • the Northern Pipeline Act; and
  • the Species at Risk Act.

McCarthy Tétrault’s Comments

The amendment to section 35 of the Fisheries Act appears appropriate because it better circumscribes the scope of this offence which, until now, was excessively broad and imprecise.

Moreover, the CEAA 2012 has introduced several important improvements to the Canadian environmental Assessment Process, including provisions for:

  • clarifying which projects shall be subject to the federal process;
  • prescribing time periods within which the environmental assessment must be completed; and
  • establishing procedures for reducing duplication of federal and provincial environmental assessments concerning the same project.

Furthermore, the federal Assessment Process is now limited to major industrial projects. This means that proponents will no longer be subject to the federal process simply because a permit must be issued under a designated regulatory provision, as was the case under the Former Act. What is more, the federal Assessment Process is now focused on the environmental effects that are within federal legislative jurisdiction, thus leaving to the provinces the duty to assess the other environmental effects.

Despite these modifications, the new federal process will continue to be a major source of uncertainty in the development of industrial projects in Canada. Indeed, the effective scope of this reform will depend on how the Minister will use his power to require that any physical activity that raises substantial public environmental concerns be subject to the federal Assessment Process. Moreover, the federal government retains extensive discretionary power enabling it to decide whether or not to authorize major industrial projects and to set the environmental conditions to which these projects will be subject.