Understanding Canada’s new regulatory framework.

Patrick O'Rourke, CFA 403-539-8615

On June 20, 2019 the House of Commons of Canada passed Bill C-69 which repeals the Canadian Environmental Assessment Act, 2012 and replaces it with the Impact Assessment Act and the Canadian Energy Regulator Act. While the legislation has widely been viewed by industry as decidedly negative, we believe an examination of both the new and old regulatory systems is warranted in order to best understand what the regulatory framework now looks like, and how it compares to project development regulations in other jurisdictions.

What is Bill C-69?
The Bill names the "Impact Assessment Agency of Canada" as the authority responsible for 'impact assessments' and establishes a planning phase for impact assessments of designated projects, which includes requirements to cooperate with and consult certain persons and entities, and requirements with respect to public participation. It enacts the Canadian Energy Regulator Act, which establishes the "Canadian Energy Regulator" (and disbands the existing National Energy Board) and sets out its composition, mandate and powers. The role of the regulator will be to regulate the exploitation, development and transportation of energy within Parliament’s jurisdiction (generally inter-Provincially or internationally). Overall, 99 Amendments were made to the final bill.

What are the Key Issues?
The Federal Government has marketed the changes to industry, investors and voters as a way to streamline the process of approving large energy projects in Canada, but investors and industry have been skeptical of the potential impacts of the bill. Concerns around the bill include:

• Indefinite Pauses to the Regulatory Approval Process: While the act shortens the timeframe for assessments by the regulator from 365 days to 300 days, and for review panels’ assessments from 720 days to 600 days, the legislation allows for unlimited resets of the planning stage from the Governor in Council. While the potential for indefinite delays remain, amendments to the bill have moved this power from the Environment Minister to the Governor in Council.
• Potential Involvement of Unrelated Parties: The planning phase of assessments originally required the applicant to engage with anyone choosing to intervene in a project, not necessarily just those with a direct vested interest as stakeholders. Amendments to the final bill have attempted to address this by giving the regulator the power to decide who can intervene on a given project.
• Additional Ambiguity: While the act calls for ‘science and evidence based findings’, it also specifies that certain ambiguous concerns such as ‘traditional Indigenous knowledge’ (potentially resulting in contradictory findings with the first requirement noted), sustainability, as well as "the intersection of sex and gender with other identity factors" must be accounted for in the decision-making process. Assessments that proceed to a review panel “...must allow, if appropriate, the admission of evidence that would not normally be admissible under the rules of evidence.”
• Final Decisions Rest with the Environment Minister: Despite amendments to the bill,  which have limited the powers of the Minister (specifically the Minister’s ability to singlehandedly delay projects indefinitely), the act specifies that all final decisions will rest with the elected Minister's office, leaving the ultimate decision with the Minister, potentially leading to increased politicization of projects in the future.