On May 21, 2013, Canada's federal Minister of the Environment (Minister) approved the substitution of the British Columbia environmental assessment process with respect to the LNG Canada Export Terminal, a natural gas liquefaction facility project proposed by LNG Canada Development Inc. (LNG Canada). This marks the third time over a six-week period, and only the third time overall, that the Minister has approved a substitution under the Canadian Environmental Assessment Act, 2012 (CEAA 2012), which came into force on July 6, 2012. The first two approvals relate to proposed coal mines. All three approvals pertain to environmental assessment processes in B.C.

Together, these decisions offer some guidance for provinces other than B.C. that are considering substitution requests. They also highlight the importance of a formal agreement between B.C. and the Canadian Environmental Assessment Agency (Agency) with respect to substitution.

Substitution under the CEAA 2012

In certain circumstances, the CEAA 2012 permits the substitution of a provincial review process for a federal environmental assessment with respect to "designated projects" (i.e., projects that would be subject to a federal environmental assessment). The goal of this mechanism is to avoid duplication and regulatory burden by preventing projects from having to undergo assessments at both the federal and provincial levels. Substitution is available when the Agency is the federal authority responsible for the project in question. Substitution is not available when the responsible authority is the National Energy Board or the Canadian Nuclear Safety Commission. Nor is it available if the project has already been referred to a review panel.

To initiate the substitution process for a project, a provincial government must make a request to the federal government. Once the province has requested substitution, the Minister must grant an approval if he or she believes the provincial environmental assessment process is an appropriate substitute for the federal process. In order for the Minister to reach this determination, he or she must be satisfied that the process will meet certain conditions. Specifically, the Minister must ensure that the provincial process considers the factors set out in section 19(1) of the CEAA 2012, which includes the "environmental effects" of the proposed project and the significance of those effects. ("Environmental effects" is a defined term under the CEAA 2012 that covers a broad range of environmental changes that touch upon areas of federal jurisdiction, including changes that affect Aboriginal Peoples.) The Minister must also ensure that the substituted provincial process will provide for public participation and enable public access to records, that a report will be submitted once the process is complete (and made available to the public), and that the process will meet any other conditions established by the Minister.

Substitution does not give provinces final decision-making power with respect to proposed projects designated under the CEAA 2012. Ultimately, the decision rests with the federal government as to whether a project receives approval under the CEAA 2012.

Memorandum of Understanding between the Agency and the B.C. Environmental Assessment Office

On March 15, 2013, the Agency and B.C.'s Environmental Assessment Office entered into a Memorandum of Understanding on the Substitution of Environmental Assessments (MOU). Under the MOU, B.C. agreed to fulfill a number of commitments in the event that substitution is granted for a proposed project.

Significantly, B.C.'s commitments under the MOU mirror the conditions that must be satisfied under the CEAA 2012 in order for the Minister to find that a provincial process will serve as an appropriate substitute for a federal environmental assessment. Section 4 of the MOU is critical in this respect, as it sets out B.C.'s commitment to ensure that the factors under subsection 19(1) of the CEAA 2012, will be considered in a substituted environmental assessment, and in relation to any Orders made under certain sections of the B.C. Environmental Assessment Act (related to the scope of an assessment and the procedures and methods to be used).

Also under section 4 of the MOU, if a substitution is granted, B.C. will request the participation of federal departments with specialist or expert information or knowledge with respect to the proposed project, provide the public an opportunity to participate in the assessment, and provide a report to the Agency within a specified time-frame.

Section 5 of the MOU is also critical from the perspective of the three substitution approvals granted since April 15, 2013. Under this section, the parties agreed that certain aspects of aboriginal consultation would be delegated to B.C. in the event of a substitution – namely, the gathering of information from aboriginal groups about the impact of the proposed project on their potential or established aboriginal rights or treaty rights and ways to prevent, mitigate or otherwise address those impacts. An Annex to the MOU addresses details related to this procedural delegation, including funding for aboriginal groups to support consultation on substituted environmental assessments.

Interestingly, section 5 of the MOU includes a disclaimer with respect to consultation between B.C. and Métis under a substituted environmental assessment. The section holds that such consultation is conducted on behalf of the Government of Canada "and should not be construed in any way as an acknowledgement by British Columbia that it owes a duty of consultation or accommodation to Métis within British Columbia under s. 35 of the Constitution Act, 1982."

Substitution Approvals and Conditions

The federal government has now approved three substitution requests from B.C. One of the two approvals granted on April 15, 2013, is for the Sukunka Coal Mine Project, an integrated surface and underground metallurgical coal mine in northeast B.C. The second approval granted on April 15, 2013, is for the Carbon Creek Metallurgical Coal Mine Project, an open pit metallurgical coal mine, also in northeast B.C. The third and most recent approval, granted on May 21, 2013, is for the LNG Canada Export Terminal, which involves the construction and operation of a natural gas liquefaction facility and marine terminal for the export of liquefied natural gas in the District of Kitimat, B.C.

The three substitution decisions are strikingly similar. Each decision holds that B.C.'s request for substitution is granted on the basis of B.C.'s commitments under the MOU. Further, the conditions attached to each decision directly reflect B.C.'s commitments under sections 4 and 5 of the MOU. For example, a condition under each decision is that B.C. will conduct procedural aspects of aboriginal consultation in accordance with the process set out in the MOU.

Significance of the Substitution Decisions

The three substitution decisions confirm that the federal government is open to allowing the provinces to conduct environmental assessments for designated projects under the CEAA 2012, thus negating the need for a parallel assessment by the Agency. That being said, the conditions of the three decisions indicate that provinces must show that their substituted processes will take into account the same factors that would be taken into account in a federal assessment, as well as enable public participation. At present, B.C. has assured the federal government that these conditions will be met. In their current form, environmental assessments processes in other provinces may not be able to meet this standard.

Further, the three decisions all pertain to an MOU that is in place with the Agency. The decisions indicate that the federal government considered the MOU in deciding to grant B.C.'s substitution requests, and that the federal government relied heavily on the MOU in setting the conditions for each approval. This suggests that other provinces would be wise to enter into MOUs, both for the purpose of streamlining substitution approvals and to achieve more certainty in relation to the conditions that the federal government applies to substitutions.

Finally, B.C.'s approach to Métis consultation may be interesting for other provinces that have been reluctant to recognize a duty to consult with Métis. Through the MOU, B.C. has found a way to meet the conditions required for substitution without taking a position on whether it owes a constitutional duty of consultation and accommodation to Métis.