The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada’s upstream petroleum industry. CAPP represents companies that explore for, develop, and produce natural gas and crude oil throughout Canada, as well as industry service providers. Together, CAPP's members account for over 90% of Canada’s crude oil and natural gas production, which generates revenues in the order of $110-billion-a-year. This industry is the largest private sector investor in Canada, providing essential energy products to the country and its trading partners. CAPP’s mission is to enhance the economic sustainability of the Canadian upstream petroleum industry in a safe and environmentally and socially responsible manner, through constructive engagement and communication with governments, the public, and stakeholders in the communities in which we operate.
CAPP appreciates the opportunity to contribute to the House of Commons Standing Committee on Environment and Sustainable Development’s (the Committee) review of the Canadian Environmental Assessment Act (CEAA).
Since it came into force in 1995, CEAA has made an important contribution to ensuring projects are designed and executed with due regard for the identification and mitigation of potentially adverse environmental impacts. However, despite federal initiatives to review and improve the performance of Canada’s environmental regime, the overall federal Environmental Assessment (EA) process has not kept pace with the accumulation of knowledge and experience regarding environmental management of project activities, or with the evolution of complementary policy and regulatory mechanisms for environmental protection.
Issues regarding process efficiency, effectiveness, predictability, and timeliness remain. Canada’s environmental regulatory framework has developed incrementally over the years, resulting in a patchwork of legislation that has introduced redundancies and conflicts in authority and responsibility for environmental management, and imposes complex and often uncoordinated and conflicting review and approval requirements on proponents. Moreover, the management of environmental issues in Canada is complicated by matters of overlapping and shared jurisdiction and authority within and between federal, territorial and provincial governments. This cumulative regulatory burden is too often characterized by duplication, delays, and incremental costs that undermine economic viability without contributing to better environmental protection. The increased cost, risk, and uncertainty associated with the Canadian environmental regulatory framework, and the federal EA process in particular, discourages investment in oil and gas projects in Canada, jeopardizing the competitiveness of the oil and gas sector and of the country as a whole., jeopardizing the competitiveness of the oil and gas sector and of the country as a whole.
To effectively address these issues, CAPP believes there is a need for broad-based regulatory reform. To best achieve balanced and effective outcomes, it is critical that policy and regulatory objectives be aligned and consistent across the entire policy and regulatory framework governing resource development.
We recognize that broad-based regulatory reform is beyond the mandate of the Committee’s review of CEAA. However, we believe it is important for the Committee to review CEAA with an eye towards the entire federal and provincial policy and regulatory framework that governs resource development and project reviews. CAPP believes such a holistic approach to the CEAA review will encourage progress towards a more coherent, integrated regulatory framework that provides greater certainty and clarity, while reducing duplication and conflict in the EA process.
CAPP supports reform that is based on balanced and transparent policy, which clearly positions CEAA within the broader regulatory framework, and facilitates sustainable economic development by promoting better environmental outcomes and providing a framework for appropriate engagement with aboriginal groups and stakeholders.
CAPP’s submission is guided by three principles that we believe must frame regulatory reform efforts at all levels:
1. Balancing the “3 ‘E’s” – Advancing environmental performance, economic growth, and energy security and reliability to achieve balanced outcomes.
2. Achieving inter and intra-governmental coordination – Removing overlap and duplication between governments and across government departments.
3. Delivering timely and effective results – Establishing mandatory regulatory timelines with results based on sound science.
Underlying these principles is the related and pervasive issue of aboriginal consultation. Improving the aboriginal consultation process, for all parties, is a priority in achieving effective economic and regulatory reform and ensuring Canada’s competitiveness. We could make great progress in other areas, and yet still have a very flawed regulatory environment, if we do not improve the aboriginal consultation process to the benefit of all Canadians.
This brief summarizes CAPP’s recommendations for improving the federal EA process based on these principles. Acting on these recommendations cannot be done through legislative changes alone; improvements will come from a combination of legislative, regulatory and administrative changes. When implemented, this suite of recommendations will facilitate sustainable economic development by promoting better environmental outcomes and providing certainty and clarity to industry and other stakeholders. To be clear, CAPP advocates better regulation and better, more efficient and effective EA.
Contextualize EA within a Comprehensive Policy and Regulatory Framework
The integrated policy and regulatory framework governing the oil and gas industry is substantive, and shared between the federal and provincial governments. Through this framework, governments, as policy-makers, articulate a vision and desired outcomes for the industry within their respective jurisdictions. To be effective, policy objectives must be designed to concurrently advance environmental performance, economic growth, and energy security and reliability.
Policy-makers must set policy direction in the broader public interest, for example to decide whether or not to develop a particular resource, with environmental consideration being one of several important factors influencing these decisions. A number of tools exist to implement policy, including jurisdictional instruments (e.g., legislation and regulations) and place-based guidance (e.g., regional plans). Within the context of the policy framework, regulatory processes ensure that outcomes are being met and regulated parties are in adherence with policy requirements. Accountability for administering the regulatory process, which includes EA and permitting authorizations and approvals, rests with regulators.
As the preamble to CEAA recognizes, the EA provides an effective means of integrating environmental considerations into project planning and decision-making processes, but is not itself a policy instrument, rather it should act to inform as to how a resource should be developed within a policy framework. A review of CEAA must clearly position the federal EA within this integrated framework as a regulatory tool. Recent experience with CEAA has shown that federal EA is experiencing ‘scope creep,’ with attempts being made to address regional (e.g., cumulative effects) or policy issues (e.g., climate change) that cannot be effectively or fairly evaluated in the context of a project-specific regulatory process. CEAA has also increasingly been used to reconsider broader policy decisions. For example, despite clear language in the Newfoundland and Labrador Energy Plan that the Lower Churchill Hydroelectric Project was needed to meet long-term provincial energy objectives, the Joint Review Panel for project concluded that the proponent, Nalcor Energy, “has not demonstrated the justification of the Project as a whole in energy and economic terms”.
Though an EA may occasionally identify areas where policy gaps exist, regulators should not intrude on the prerogative of policy-makers through EA processes. Responsibility and accountability for policy development must clearly remain with policy-makers.
Unfortunately, recent experience shows that processes and decisions pursuant to CEAA and other environmental legislation are increasingly litigated, and courts are ruling on these cases in the absence of a clear, 3 ‘E’ context. Appropriate contextualization of CEAA within the policy and regulatory framework is necessary to reduce these legal challenges. In particular, reform of CEAA, perhaps through revision of the preamble, is necessary to provide clarity on the prerogative of governments to determine policy that balances the 3 ‘E’s, ensuring that legislation relating to environmental assessments is interpreted as a regulatory tool within that context.
Increased Reliance on Other Processes to Address Policy and Regional-Scale Issues
Government-led planning tools exist, including regional studies, which consider policy issues such as environmental values, human and ecosystem health, and economic development at a broader scale than a project-specific EA. These tools typically include an analysis of potential environmental effects arising from the implementation of a policy or a suite of reasonably foreseeable development activities (i.e., cumulative environmental effects), frequently in a broader societal context addressing a more complex range of economic, social, and environmental issues than is possible or appropriate within the relatively narrow focus of project-specific EAs. Policy-level and regional-scale discourse and engagement with stakeholders and aboriginal groups, led by governments, can provide context for project-specific EA.
For example, Alberta has established a process to develop and implement regional plans through the Alberta Land Stewardship Act. A primary driver in developing these regional plans is to clarify provincial policy priorities regionally and to manage cumulative effects. Economic and social considerations, beyond the scope of EA, are taken into account in defining the priorities.
Other regional-scale tools, such as regional or strategic environmental analyses may also be used to inform the development of government policy, or project specific EAs.
Broad policy and/or regional plans should provide a framework to focus project-specific EAs conducted within the planning area so that regional work is not repeated or policy reworked at the project-specific EA level. Stated otherwise, the EA recommendations should comply with existing government policy. The EA may serve as a tool to identify policy gaps for the attention of policy makers to address, but should not serve as an alternate vehicle for determining policy by virtue of its limited scope.
3.0 Achieving Inter- and Intra-Governmental Coordination
“One Project, One EA” Led by the Best-Placed Regulator
Ultimately, a new national framework for EA is required, one that allows a predictable and consistent process to be undertaken, efficiently and effectively, by the best-placed regulator with the necessary competencies and capacity. Such a framework should be based on the long-standing principle of “one project, one assessment”, and should, therefore, emphasize equivalency and substitution.
CEAA becomes involved only when a proposed project triggers federal review, but that, in itself, should not dictate how the review is conducted. Provisions for delegation and substitution exist within the current CEAA, but are rarely employed. It is our understanding that a key deterrent to using them is the concern that alternative processes would not meet a suitable EA standard. A national framework, articulating the shared jurisdiction and objectives for EAs, would increase the applicability of these instruments by ensuring that EAs conducted through delegation or substitution meet an acceptable and consistent standard. Memoranda of understanding between the provinces and federal governments (similar to or a revision of the existing bilateral cooperation agreements) could ensure that one assessment meets all requirements and expectations. In addition, the Canadian Council of Ministers of the Environment (CCME) provides a forum for engaging Ministers of the Environment from across the country to pursue both a more coherent, integrated environmental regulatory framework and to improve coordination wherever jurisdictional responsibility is shared.
CAPP advocates increased collaboration among federal and provincial regulators and joint review agencies to cooperatively determine the need for and appropriate scope of an EA (taking into account complementary regulatory mechanisms and adaptive management) and to determine the best-placed jurisdiction to lead the EA. This activity must take place as early as feasible to ensure a single, coordinated review that meets the requirements of both jurisdictions. Consideration should be given to establishing a single default lead for each sector, especially for routine projects. This would facilitate the application and accumulation of knowledge and expertise by and within the lead authority, and the development of more efficient procedures, leading to progressively more effective and timely EAs. Where a regulator or agency with specialist expertise already exists, such as the National Energy Board (NEB) or offshore management boards, such agencies should be the default lead EA authority for all levels of EA of projects within those agencies’ respective jurisdictions.
The best-placed lead regulator should have the authority and a process to consolidate and vet input from those other authorities with jurisdiction over the proposed project, to avoid ‘scope creep’ and to focus requirements on the consequences of the proposed project, thus improving environmental outcomes. Where necessary, additional training and guidance should be provided to review authorities in order to build capacity and competency for conducting EAs.
Reaffirming the principle of “one project, one assessment” and ensuring expertise in EA is particularly timely in light of changes in Atlantic Canada. Through recent amendments to CEAA, the Agency has been established as the lead federal authority for offshore oil and gas projects, instead of the offshore petroleum boards. This has eroded the one-window approach and potentially exposes operators to duplicative assessments under CEAA and the offshore petroleum boards’ processes.
To be clear, CAPP is not advocating the absence of federal involvement in EA, but rather the efficient and consistent conduct of EA by the best-placed regulator, which may be a federal or provincial regulator, or a joint review agency. Achieving the goal of “one project, one assessment” would significantly improve the efficiency of the EA process for all parties, reducing wasteful duplication and allowing scarce resources to be focused on realizing better environmental outcomes.
Improved Coordination of Permitting
There is also a need for improved coordination of permitting by federal and provincial authorities to avoid duplicative or conflicting requirements and improve timeliness. Issues resolved in the EA should not be revisited unnecessarily in subsequent permitting processes.
Examples of how permitting may be better aligned with regulatory decisions or EA recommendations are noted in the following:
- In Alberta, the Municipal Government Act explicitly requires municipal land use and development planning and permitting to be consistent with any NRCB, ERCB, or AUC decision. Moreover, a municipality is explicitly prohibited from addressing in a hearing any matter already decided by the NRCB, ERCB, or AUC.
- Other jurisdictions include provisions for concurrent permitting and timelines for permitting after completion of an EA. For example, in BC, proponents may request that the review of the EA and provincial permit applications occur concurrently, so that crossover issues are addressed only once. In that process, eligible permits must be issued within 60 days of the issuance of an Environmental Assessment Certificate.
The aim of both of these approaches is to ensure that issues resolved in one regulatory review are not revisited in a subsequent regulatory review.
Greater Reliance on Existing Complementary Regulatory Mechanisms
Many activities involved in the construction and operation of industrial developments are well understood in terms of the manner of their execution and impact on the environment. Such activities have, essentially, become codified, in that standard, proven practices exist to effectively manage their environmental implications. Examples include, but are not limited to fire codes, building codes, electrical codes and, more importantly, environmental Codes of Practice for the construction and/or removal of watercourse crossings, diversion and use of water for routine activities like hydrostatic testing, above-ground and underground storage tanks, and reduction of emissions from industrial facilities. Regulations exist that require compliance with such standards and codes. In developing and establishing standards and codes for industry, governments have already taken steps to ensure economic activity proceeds with due regard for public and environmental health and safety.
Requiring a federal EA for these activities is duplicative and places process requirements on proponents that are disproportionate to the scale of the activity or the risk associated with that activity. The application of CEAA and the scope of a federal EA should take into consideration these complementary federal and provincial regulatory mechanisms. For example, where an EA is triggered by the need for an approval pursuant to the Navigable Waters Protection Act and where the proponent intends to conduct activities in accordance with applicable Operational Statements issued by Fisheries and Oceans Canada, the scope of the EA should not include fish and fish habitat, as the Operational Statements have been developed to ensure harmful effects on fish and fish habitat are avoided. Other examples of energy sector projects that may be good candidates for exclusion from EA, due particularly to the high level of provincial regulation and well-understood environmental implications, include watercourse crossings (especially those without in-stream work), water diversions, individual wells, and short intra-provincial pipelines.
4.0 Delivering Timely and Effective Results
Mandatory Regulatory Timelines and Increased Accountability
Assurance of timely regulatory decisions is a critical factor in investment decisions. While it is clear that some projects warrant a high level of scrutiny and public involvement, and that such processes take time, the federal EA process in Canada is fraught with lengthy process timeframes and inherent significant delays that waste money and scarce resources, undermine competitiveness, discourage investment, and jeopardize economic viability without contributing to better environmental protection. For example, Shell Canada applied for its Jackpine Mine Expansion Project in 2007 and a Joint Review Panel for that Project was not formed until September 2011. The public hearings for that Project will not occur until well into 2012. Proponents are not the only ones affected by these types of delays. Communities that stand to benefit from economic development may lose out on employment and business opportunities, while members of the public, aboriginal groups, civil society organizations, and other stakeholders who participate in an EA may not have the resources to sustain engagement over a long period of time. Although the federal EA framework already includes some provisions to encourage timeliness, significant delays still occur at key regulatory steps.
Several provinces have established mandatory timelines for key regulatory steps, as well as the overall regulatory review process as noted in the following examples:
· In BC, the Prescribed Time Limit Regulations specify durations for key regulatory steps, including reviewing the adequacy of an application for an EA Certificate and accepting it for review, completing the review of the application, and making a decision in respect of an application.
· Ontario specifies timelines for approval of the terms of reference, public and agency comment periods, completion of the regulatory review of the EA, and the Minister's decision on approval of the project.
· Nova Scotia’s Environmental Assessment Regulations specify timelines for different classes of EA, providing shorter timelines for more routine, well-understood projects and longer timelines for more complex projects. These timelines incorporate stakeholder input and reflect ten years of experience in administering the Regulations.
In addition, MOUs between the Canada-Newfoundland Offshore Petroleum Board and Canada-Nova Scotia Offshore Petroleum Board and federal authorities have been very effective for the implementation of timelines for comprehensive studies of offshore oil and gas projects in Atlantic Canada.
While not a panacea, these examples can serve as a model for improvements to the federal EA process.
CAPP advocates mandatory timelines for routine and key procedural steps, including consultation, for all levels of assessment. Of course, review authorities must have the necessary resources and competencies in place to achieve specified timelines. In addition, greater accountability for the timing of regulatory reviews is required of lead authorities responsible for EA process oversight, including the Agency and review panels. Lead EA authorities must be held accountable for achieving reasonable project timelines, ensuring EA decisions are defensible from a procedural perspective, coordinating timely, relevant, and efficient input from other review authorities, and ensuring policy and permitting issues are not drawn into the EA, but rather dealt with in the appropriate forum.
Increased Reliance on Sound Scientific Processes Underlying EAs
Sound science is the basis of credible and objective EAs Key elements that enable this are:
· the use of consistent protocols and standards to assess effects;
· adaptive management approaches; and
· follow-up and auditing to ensure outcomes are being met.
There are a number of opportunities to improve these elements within CEAA to achieve more effective results and ensure that information acquired in an EA informs both improvements in the environmental performance of the project itself, as well as subsequent EAs for other future projects.
Establishment of Stronger Protocols and Standards
Standardization of information requirements and stronger criteria, protocols, and standards for scoping and data collection, analysis, and reporting will improve data consistency, credibility, defensibility, accessibility, and overall timeliness of EAs.
Specification in advance of basic information requirements could save the proponent and regulators considerable time and effort. For example, the NEB, the ERCB, the BC Environmental Assessment Office, and Alberta Environment all have established standardized terms of reference for regulatory submissions. CAPP advocates sector-specific standard terms of reference for EA, informed by greater reliance on complementary regulatory mechanisms and an adaptive management approach. CAPP advocates sector-specific standard terms of reference for EA, informed by greater reliance on complementary regulatory mechanisms and an adaptive management approach.
Further, there are well-established science-based methods and protocols for the collection and analysis of data relevant to the assessment of potential environmental effects. Much time and resources could be saved by clear specification of preferred data sampling and analytical protocols in advance. Consistency in data collection and analysis would also increase the utility of information for other project EAs, by increasing comparability and reducing the burden of data duplication. The selection of protocols should consider regional variation and sectoral consistency.
Greater Use of Adaptive Environmental Management Approaches
Our collective understanding of environmental impact and mitigation increases with each successive EA and follow-up program. In addition, land use planning, resource management, and strategic EA processes contribute to our understanding of environmental trends, cumulative impacts, carrying capacities, and management priorities. Unfortunately, the number and scope of EAs and follow-up programs seems to constantly increase, as new requirements are added, while established and well-understood project-environment interactions continue to be re-examined. Accumulated knowledge must be better integrated into the EA process through an adaptive management approach, to improve both the EA process and its outcomes.
Accumulated knowledge should inform the determination of whether, for a new project, an EA is required, “fit for purpose” scoping for subsequent EAs, establishment of related terms of reference, and the appropriate design of follow-up programs. This would allow EA resources to be focused on those projects and project-environment interactions that are not as well understood and/or for which mitigation is new or unproven.
To be clear, adaptive management principles should be particularly applied to determine an appropriate scope of EA and/or follow-up: (1) where prior and ongoing work has proven mitigation to be effective and/or shown that environmental consequences are known and acceptable (i.e., scope may be reduced); and (2) where prior and ongoing work has shown mitigation to be unreliable or ineffective, where unforeseen effects are occurring, or where the environmental consequences of a particular activity remain uncertain (i.e., scope may be maintained or increased).
Improved Follow-Up and Greater Use of Auditing
The purpose of follow-up and monitoring is to confirm that actual residual environmental effects are consistent with the predictions made in the EA and that mitigation measures are effective. Too often, follow-up and monitoring requirements fail to adequately connect outcomes with these two fundamental goals. Follow-up and monitoring program design must focus on either one or both of these two fundamental purposes that are outlined in CEAA. Further, follow-up and monitoring must incorporate the principles of adaptive management, discussed above, to ensure the outcomes inform appropriate action. For example, if the follow-up program shows the residual environmental effects are indeed as predicted and the mitigation is working, monitoring may be reduced. In contrast, where a follow-up program reveals an unforeseen environmental effect or a problem with mitigation, action can be taken to assess and resolve the issue.
As an adaptive environmental management approach is implemented, regulators should also make greater use of appropriate auditing powers, to maintain a high level of confidence among stakeholders that industry is complying with applicable regulations, standards, and codes of practice, mitigation measures are being effectively implemented, and environmental effects are as predicted. Such an auditing process could be modeled after the ERCB’s compliance and enforcement processes, which establish auditing requirements and frequency on the basis of risk and prior company performance, and would be conducted by the best-placed regulator.
5.0 Improved Aboriginal Consultation Processes
Underlying all these principles and related to the EA process, is the pressing need for improved coordination of the roles and expectations of the federal and provincial Crowns with respect to aboriginal consultation. Defensible and credible processes for consistent, equitable and timely aboriginal consultation would improve the predictability and certainty of procedural outcomes, while also better integrating aboriginal traditional knowledge into EA and engaging aboriginal peoples in economic development opportunities. At present, there are duplicative consultation processes established by provincial and federal government departments and regulators that create an additional burden on proponents and aboriginal communities without improving environmental outcomes.
Clarity and accountability for consultation processes and objectives must also be examined in the context of the entire policy and regulatory framework. Meaningful aboriginal engagement at both a regional scale and a policy level would set the foundation for better relations and provide context for project-specific EA-triggered consultation. This would further improve the incorporation of traditional knowledge in EAs by focusing it on matters related to the project. Proponents should not be placed in the position of having to address issues of government policy in the context of project-specific consultation. The Supreme Court of Canada has been clear that the Crown is accountable for leading and designing consultation processes and that industry’s consultation role is within the context of specific projects. Our members are pleased to fulfill our role as industry operators within this context.
6.0 Industry’s Role
We recognize that CAPP and its members also have an important role to play in improving Canada’s regulatory framework generally, and the federal EA process in particular. Therefore, CAPP and its members will:
· continue to deliver complete, credible EA submissions based on scientifically defensible data and methodologies;
· strive to improve the accessibility of data collected for EAs and follow-ups;
· work with federal and provincial regulators to define appropriate protocols, criteria, thresholds, and terms of reference necessary to implement recommended procedural improvements;
· participate in government-led strategic EA and/or regional land use planning processes to better address regional-scale issues, like cumulative effects, and facilitate the scoping and streamlining of project-specific EAs; and
· explore the increased use of sector-specific class analyses.
In this brief, CAPP has advanced a suite of recommendations for key changes that will, when implemented, deliver simpler, clearer processes that will offer improved environmental protection and greater certainty to industry, while setting the stage for progress towards a more coherent, integrated national environmental regulatory framework.
Key to improving CEAA is clarifying that the federal EA process fits within the broader policy and regulatory framework overseeing development in Canada. Once this is accomplished, a number of opportunities exist to improve both coordination and execution of this process.
Taking these steps will serve to improve EAs in Canada by ensuring that these EAs remain focused on their mandate of improving environmental outcomes and addressing consequential issues relevant to projects, and avoid digressing into issues that they cannot effectively address. All stakeholders, including government, industry, and the public, stand to benefit from these improvements.
As CEAA is a key element of the regulatory process, it will be important for the considerations of the Committee to inform, on a timely basis, the other legislative elements that will need to be engaged in regulatory reform.
To support this brief, CAPP has also developed specific recommendations for changes to the CEAA legislation and process, which will be submitted under separate cover. The detailed submission includes specific recommendations for legislative and regulatory amendments and administrative improvements for consideration and use by civil servants (e.g., within the Canadian Environmental Assessment Agency, Major Projects Management Office, and Office of the Minister of Environment) who ultimately would be responsible for implementing policy, legislative, and administrative reforms to the federal EA process.
World Economic Forum, “Global Competitiveness Report 2011-2012” online: <http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf>
International Energy Agency, “Energy Policies of IEA Countries: Canada 2009” (2010)
 Canada–Newfoundland & Labrador and Canada–Nova Scotia Offshore Petroleum Boards.
 Work is proceeding to develop joint Terms of Reference for federal-provincial EA of in situ oil sands projects in Alberta. As per the Canadian Constitution (1982, S.35), which includes First Nations, Inuit, and Métis peoples.