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Canada Gazette

Part II

OTTAWA, THURSDAY, MARCH 19, 2009

Registration
SOR/2009-88 March 12, 2009

CANADIAN ENVIRONMENTAL ASSESSMENT ACT

Regulations Amending the Exclusion List Regulations, 2007

P.C. 2009-391 March 12, 2009

Whereas the Governor in Council is satisfied that the environmental effects of certain projects in relation to physical works are insignificant;

And whereas the projects set out in the Exclusion List Regulations, 2007 remain subject to all other applicable laws;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, pursuant to subparagraphs 59(c)(ii) (see footnote a) and (iii) (see footnote b) of the Canadian Environmental Assessment Act (see footnote c), hereby makes the annexed Regulations Amending the Exclusion List Regulations, 2007.

REGULATIONS AMENDING THE EXCLUSION LIST REGULATIONS, 2007

AMENDMENTS

1. Subsection 1(1) of the Exclusion List Regulations, 2007 (see footnote 1) is amended by adding the following in alphabetical order:

“Building Canada Plan” means the plan referred to in Building Canada: Modern Infrastructure for a Strong Canada published by the Government of Canada under ISBN 978-0-662-05130-5 and available on the Web at www.buildingcanada-chantierscanada.gc.ca. (plan Chantiers Canada)

“environmentally sensitive area” means an area protected for environmental reasons in regional or local land use plans, or by a local, regional, provincial or federal government body. (région écosensible)

“intelligent transportation system” means a system that uses technologies to improve the efficiency, safety and reliability of a transportation network. (système de transport intelligent)

2. The definitions “Building Canada Plan”, “environmentally sensitive area” and “intelligent transportation system” in subsection 1(1) of the Regulations are repealed.

3. Section 5 of the Regulations and the heading before it are replaced by the following:

5. The projects and classes of projects that are funded under the Building Canada Plan, set out in Schedule 4 and to be carried out in places other than a national park, park reserve, national historic site or historic canal are exempted from the requirement to conduct an assessment under the Act.

4. Section 5 of the Regulations is repealed.

5. The Regulations are amended by adding, after Schedule 3, the Schedule 4 set out in the schedule to these Regulations.

6. Schedule 4 of the Regulations is repealed.

COMING INTO FORCE

7. (1) Sections 1, 3 and 5 of these Regulations come into force on the day on which they are registered.

(2) Sections 2, 4 and 6 of these Regulations come into force on March 31, 2011.

SCHEDULE
(Section 5)

SCHEDULE 4
(Section 5)

EXCLUSION LIST FOR PROJECTS AND CLASSES OF PROJECTS FUNDED UNDER THE BUILDING CANADA PLAN AND CARRIED OUT IN PLACES OTHER THAN NATIONAL PARKS, PARK RESERVES, NATIONAL HISTORIC SITES OR HISTORIC CANALS

1. The proposed modification of a municipal or community building or facility for the purpose of improving energy efficiency.

2. The proposed modification of a municipal or community building, structure or facility for the purpose of repairing or preventing damage to property as a result of a natural disaster or a severe weather event.

3. The proposed installation of an intelligent transportation system and its supporting structures.

4. The proposed modification of a municipal or community facility for the collection, processing, diversion, treatment or disposal of solid waste.

5. (1) The proposed construction, installation, operation, expansion, modification or removal of a building that is only to be used for one or more of the purposes set out in subsection (2) if the project is not to be carried out within 250 m of an environmentally sensitive area.

(2) The following uses are set out for the purpose of subsection (1):

(a) providing residential, institutional or other accommodations;

(b) providing offices, meeting rooms and related facilities;

(c) providing medical or emergency facilities and services;

(d) providing educational, financial or informational facilities and services;

(e) providing cultural, heritage, artistic or tourism facilities and services;

(f) providing recreational and sporting facilities and services;

(g) providing municipal parking or maintenance facilities; and

(h) presenting artistic, cultural, sporting and other community-related events.

6. The proposed construction, installation, operation, expansion or modification of a public transit facility,

(a) if the project is to be carried out within 300 m of a transportation or utility right-of-way or on land zoned for transportation or industrial use; and

(b) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

7. The proposed construction, installation, operation, expansion or modification of a bus rapid transit system,

(a) if the project is to be carried out within 300 m of a transportation or utility right-of-way or on land zoned for transportation or industrial use; and

(b) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

8. The proposed modification or expansion of a public transit or railway system,

(a) if the project is to be carried out within 300 m of a transportation or utility right-of-way or on land zoned for transportation or industrial use; and

(b) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

9. The proposed construction, installation, operation, expansion or modification of an overpass, a grade separation, a road intersection or a highway interchange,

(a) if the project is to be carried out within 300 m of a transportation or utility right-of-way or on land zoned for transportation or industrial use; and

(b) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

10. The proposed modification or widening of a road or public highway,

(a) if the project does not involve the addition of more than two lanes;

(b) if the project is to be carried out within 300 m of a transportation or utility right-of-way or on land zoned for transportation or industrial use; and

(c) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

11. The proposed modification or widening of a bridge, including the bridge approaches,

(a) if the project does not involve the addition of more than two lanes;

(b) if the project is not to be carried out in a water body; and

(c) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

12. The proposed construction, installation, operation, expansion, modification or removal of a facility for the treatment of potable water and related distribution systems, if the project

(a) does not involve a dam, dyke or a reservoir other than a reservoir for the storage of treated water;

(b) does not involve the extraction of ground water; and

(c) if the project

(i) is not to be carried out within 250 m of an environmentally sensitive area, or

(ii) is to be carried out within 250 m of an environmentally sensitive area and

(A) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(B) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

13. The proposed construction, installation, operation, expansion, modification or removal of a municipal or community facility for the collection or treatment of wastewater and stormwater if the project

(a) is not to be carried out within 250 m of an environmentally sensitive area, or

(b) is to be carried out within 250 m of an environmentally sensitive area and

(i) complies with any law and any management plan, in relation to the environmentally sensitive area, and

(ii) in the case of an environmentally sensitive area protected by a federal government body, measures are in place to protect the area and the project has a total cost, other than the cost of land, below $10 million.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Executive summary

Issue: First Ministers have agreed to work together on a number of important actions to provide stimulus to the Canadian economy. One of the actions identified is to streamline the regulatory and environmental approvals process for infrastructure projects to avoid unnecessary overlap and duplication, while continuing to protect the environment. Concerns have been expressed that federal environmental assessment requirements can unnecessarily slow down funding decisions, particularly for small community and transportation infrastructure projects that have insignificant environmental effects. Another area of concern is situations where a federal environmental assessment is triggered after the completion of a provincial assessment, or relatively late in the project development process. Within the context of the current economic situation, there is a need to modify the environmental assessment process, through existing legislative authority, to make it more efficient so as to not impede more timely decisions on public infrastructure projects without jeopardizing protection of the environment.

Description: These regulations target the federal environmental assessment process where it is needed for public infrastructure projects. The regulations will be in effect until March 2011. Duplication in federal and provincial environmental assessment processes is being addressed and unnecessary environmental assessments will be reduced. Specific classes of projects to be funded under the Building Canada plan are exempted from requiring a federal environmental assessment by adding them to the Exclusion List Regulations, 2007 under the Canadian Environmental Assessment Act (the CEA Act). The new Infrastructure Projects Environmental Assessment Adaptation Regulations enable streamlining the environmental assessment process through the use of provincial environmental assessments. The Minister of the Environment can allow the substitution of a provincial environmental assessment for a federal environmental assessment, while retaining federal decision making, where the provincial process meets prescribed requirements related to the content of the environmental assessment and public participation.

Cost-benefit statement: The direct cost savings related to a reduced number of environmental assessments is estimated to be $100 to $150 million. The regulations are also expected to generate economic benefits to Canadians by facilitating earlier implementation of infrastructure projects. This will be done by reducing the number of federal environmental assessments required for infrastructure projects that pose minimal adverse environmental effects. In turn, it will allow government resources to be focused on projects with the potential to cause significant adverse environmental effects. The regulations also reduce duplication with provincial processes. The changes with respect to environmental assessment are just one of the regulatory and administrative measures being used to speed up the implementation of infrastructure projects and stimulate the economy. The potential costs or risks posed by the regulations are expected to be small. Projects excluded from federal environmental assessment are those with a history of environmental assessments that indicate the types of projects to be excluded have insignificant environmental effects. For non-excluded projects, there may be a substitution to a provincial process, but an environmental assessment meeting prescribed conditions is still conducted.

Business and consumer impacts: The regulations will reduce unnecessary delays in delivering infrastructure projects, while maintaining environmental protection. They are consistent with ongoing efforts to improve the federal environmental assessment framework. The application is being targeted to those areas where most needed, i.e. projects funded under the Building Canada plan. Coordination and cooperation on the delivery of infrastructure projects will improve as a result of faster federal decisions that will accelerate construction and flow federal money in a more timely fashion.

Domestic and international coordination and cooperation: Enabling the substitution of the federal process will avoid duplication, while ensuring the fundamental requirements of the CEA Act are met and federal decision making is retained. The regulations that allow for substitution are consistent with ongoing federal-provincial discussions to improve collaboration between federal and provincial environmental assessment systems, including identifying measures to support the concept of “one project-one assessment.” These regulations do not affect the existing ability to coordinate environmental assessments on projects that may cross the international border.

Issue

In the current global economic climate, the Government of Canada is working with provinces, territories and communities to build much needed infrastructure across the country. With this in mind, the government will expedite key components of the Building Canada plan to ensure that infrastructure projects are delivered as quickly as possible across the country to stimulate the economy and create jobs. The Building Canada plan, launched in November 2007, is a $33 billion investment in public infrastructure including highways, bridges, roads, sewer and water systems, public transit, cultural facilities and recreational complexes.

The Prime Minister and Canada’s Premiers and Territorial Leaders have agreed to work together on a number of important actions to provide stimulus to the Canadian economy. Under the theme of making infrastructure investment, one of the actions identified is to streamline the regulatory and environmental approvals process to avoid unnecessary overlap and duplication while continuing to protect the environment. Infrastructure projects are often subject to a number of regulatory approvals and environmental assessments that involve various levels of government and various consultation processes.

This regulatory package puts forth targeted adjustments to the federal environmental assessment process for certain infrastructure projects funded under the Building Canada plan through existing regulatory authorities to ensure optimal efficiency. This initiative builds upon and is consistent with ongoing efforts to modernize the current federal environmental assessment process by eliminating assessments for projects posing minimal adverse environmental effects in order to focus on projects with the potential to cause significant adverse environmental effects, and by better integrating federal and provincial assessments. Through this initiative, the federal environmental assessment process will be targeted where it is needed for public infrastructure projects, duplication in federal and provincial environmental assessment processes will be addressed and unnecessary environmental assessments will be eliminated.

This regulatory initiative will ensure a more efficient environmental assessment process and eliminate a potential barrier to timely decisions on projects funded under the Building Canada plan without jeopardizing the protection of the environment. The regulatory package includes:

1) Additions to the Exclusion List Regulations, 2007 under the Canadian Environmental Assessment Act (the CEA Act) to add classes of projects to be funded under the Building Canada plan. In certain cases, measures will need to be in place in order to protect environmentally sensitive areas and the exemption is limited to projects below a $10 million total cost threshold. These additions will be in effect until March 31, 2011.

2) New regulations under the CEA Act to adapt the environmental assessment process for projects funded under the Building Canada plan. This will enable provincial environmental assessment processes, meeting prescribed requirements, to substitute for a federal environmental assessment for a specific project or class of projects, while retaining federal decision making. These Regulations will be in effect until March 31, 2011.

Objectives

The objective of this regulatory package is to avoid unnecessary delays in decisions on public infrastructure projects funded under the Building Canada plan attributable to the federal environmental assessment process while continuing to protect the environment.

The Regulations Amending the Exclusion List Regulations, 2007 remove the requirement for a federal environmental assessment where projects pose minimal adverse environmental effects. They are expected to exclude the vast majority of infrastructure projects funded under the Communities Component of the Building Canada plan (up to 2 000 over the next two years) from requiring federal environmental assessments. These projects include those with environmental benefits, such as improved water supply, wastewater treatment, and public transit projects. These regulations will also exclude a number of larger projects funded under the Building Canada plan, which will contribute to a stronger economy and better communities.

In cases where an environmental assessment is required, the Infrastructure Projects Environmental Assessment Adaptation Regulations will enable a provincial environmental assessment to substitute for the federal process, provided that the former meets requirements specified in these Regulations. In those cases, the time required to conduct the environmental assessment will be significantly reduced, by as much as 12 months, by relying on a provincial environmental assessment, while retaining federal decision-making authority on the potential environmental effects of the projects. These Regulations are designed to avoid duplication with provincial processes without compromising the quality of the environmental assessments, and will result in timelier decisions on larger infrastructure projects.

This regulatory package will contribute to accelerating the approval of public infrastructure projects as part of the government’s economic stimulus initiative. In enabling more spending on public infrastructure over the short-term, these regulations are expected to have a positive effect on efforts to stimulate the economy, without compromising environmental protection. In addition, assessment resources can be focused on projects having potentially significant effects.

Description

An environmental assessment is an assessment of the potential adverse environmental effects of a project and identification of measures to eliminate or mitigate those effects. An environmental assessment must be conducted for any project, as defined under the CEA Act (see footnote 2), if a federal authority proposes the project, funds the project, grants an interest in land for the project, or allows the project to proceed by issuing an authorization pursuant to any of the statutory or regulatory provisions identified in the Law List Regulations. A project is either a physical work or an activity not related to a physical work identified in the Inclusion List Regulations. An environmental assessment is not required for projects listed on the Exclusion List Regulations, 2007. The environmental assessment is conducted by the federal authority that makes one of the above-noted decisions and is used as part of the decision-making process related to the project. Approximately 7 000 federal environmental assessments are conducted annually across the whole federal system.

Provinces also have their own environmental assessment processes which tend to focus on a much smaller number of projects. In the North, environmental assessment processes established in land claims agreements and through other federal legislation apply, and the CEA Act has very limited application.

The Building Canada plan is a $33 billion federal program that provides a framework for collaboration with provinces, territories and municipalities in funding public infrastructure projects from 2007–2014. Building Canada focuses on delivering cleaner air and water, safer roads, shorter commutes, and prosperous, livable communities. This seven year plan supports national priorities — a stronger economy, cleaner environment and better communities, by providing stable, flexible and predictable funding to Canadian provinces, territories and municipalities in order to allow them to plan for the longer-term and address their ongoing infrastructure needs.

Under the CEA Act (Paragraph 5(1)(b)), an environmental assessment is required before a federal authority can make a final decision to provide funding for specific projects supported under the Building Canada plan. The programs that will provide such funding are principally the Building Canada Fund ($8.8 billion), the Gateways and Border Crossings Fund ($2.1 billion), and the Asia Pacific Gateway and Corridor Initiative ($1 billion).

The Gateways and Border Crossings Fund and the Asia Pacific Gateway and Corridor Initiative focus on strategic corridors linking to international gateways. Eligible projects include improvements to core National Highway System routes impacted by international trade volumes; inter-modal connectors and facilities; international bridges and tunnels; rail/road grade separations; short-line railways; and short-sea shipping and marine ports.

The Building Canada Fund includes two components. The Major Infrastructure Component focuses on larger, strategic projects of national and regional significance, including drinking water, wastewater, the core National Highway System, and public transit. The Communities Component is for projects in communities with populations of fewer than 100 000. These projects are often relatively small with little potential for significant adverse environmental effects.

Federal responsible authorities, provincial governments and recipients of infrastructure funding have expressed concerns that federal environmental assessment requirements can unnecessarily slow down funding decisions. Of particular concern are small community and transportation infrastructure projects that have insignificant environmental effects (e.g. buildings, convention centres, improvements to grade separations or installation of an intelligent transportation system to improve road safety), situations where a federal environmental assessment is triggered after the completion of a provincial assessment, or relatively late in the project development process because of the timing of federal funding approval.

Within the context of the current economic situation, there is a need to modify the environmental assessment process, through existing legislative authority, to make it more efficient so as to not impede more timely decisions on public infrastructure projects without jeopardizing protection of the environment.

By building on past experience of responsible authorities from the Transportation, Infrastructure and Communities portfolio and completed environmental assessments, this regulatory initiative will better align the federal environmental assessment process with the potential environmental risk of public infrastructure projects and will reduce or eliminate one of the potential barriers to timely decisions about projects funded under the Building Canada plan without jeopardizing the protection of the environment.

1) Regulations Amending the Exclusion List Regulations, 2007

The Exclusion List Regulations, 2007 specify that projects involving physical works, for which the Governor in Council is satisfied result in insignificant environmental effects, are excluded from undergoing an environmental assessment under the CEA Act. The legal authority to make the Exclusion List Regulations is found in subparagraph 59(c)(ii) of the CEA Act. A project exclusion list has been in existence since the CEA Act came into force in 1995.

Through these regulatory amendments, specific classes of projects to be funded under the Building Canada plan will be excluded from requiring a federal environmental assessment by adding them to the Regulations, under the CEA Act. The classes of projects being added have been shown to have insignificant environmental effects based on the results of completed environmental assessments and the experience of responsible authorities dealing with these projects. Examples include a variety of buildings, bus and rapid transit systems, and new water supply systems.

Completed environmental assessments on over 1 000 projects have demonstrated that these types of infrastructure projects have insignificant environmental effects based on current design standards. The scope of these projects is generally well understood, and the design of the projects integrates measures to avoid or minimize environmental effects. In cases where measures are needed to address project-specific environmental issues, they are directly integrated into the technical planning and design of the project, and therefore do not require additional site-specific mitigation measures through environmental assessments. Furthermore, the nature, scope and environmental setting of these projects are well understood. They are typically located in areas zoned for transportation or industrial use. Projects are carried out in accordance with provincial, municipal and industry standards and codes of practice and in some cases are subject to provincial environmental assessments, as well as municipal permitting requirements.

The CEA Act also allows for the creation of regulations to exempt classes of projects or individual projects from requiring a federal environmental assessment under prescribed environmental conditions and having a total project cost below a prescribed amount. This authority, found in subparagraph 59(c)(iii), was included in the CEA Act by Parliament in 2003, in recognition that the current exclusion list did not sufficiently capture all of the smaller, routine projects where an environmental assessment does not provide any real benefit to the planning of a project nor additional protection of the environment in the context of other federal, provincial and municipal regulatory schemes. The cost of a project is an indicator of its size and the complexity of its construction and operation. However, recognizing that the cost of a project does not perfectly correspond with its potential for adverse environmental effects, this type of exclusion includes a requirement to meet prescribed environmental conditions as a safeguard.

This authority was used in the current regulatory amendment in a very limited way, by requiring that measures be in place to ensure that no significant adverse environmental effects on an environmentally sensitive area occur. Since this legislative authority requires that a cost value be specified, an amount of $10 million has been specified and will ensure that larger projects on or near environmentally sensitive areas undergo an environmental assessment.

The projects that are exempted from requiring an environmental assessment as a result of these Regulations will still be subject to applicable municipal, provincial and other federal environmental laws (e.g. Fisheries Act) and approvals. The exclusions do not affect the obligation for projects to comply with all other applicable laws, including environmental laws.

It is estimated that as many as 2 000 infrastructure projects over two years may be exempted from the requirement for federal environmental assessment as a result of these Regulations.

Recognizing both the need to invest quickly, and the public accountability of all levels of government, the Government of Canada is looking to simplify and develop a more efficient review process to help get projects started in the 2009 and 2010 construction seasons.

This regulatory measure is consistent with efforts over the last few years to streamline environmental assessment processes across Canada and to reduce the number of federal environmental assessments for projects that are not likely to have significant environmental effects. This will have the effect of eliminating unnecessary federal environmental assessments and concentrating limited federal resources on those projects or classes of projects where the potential for adverse environmental effects is greatest.

2) Infrastructure Projects Environmental Assessment Adaptation Regulations

These Regulations enable the streamlining of the environmental assessment process through the use of provincial environmental assessments. They adapt current substitution provisions in the CEA Act so that the Minister of the Environment, under certain conditions, can allow for the substitution of a federal environmental assessment by a provincial environmental assessment, while retaining federal decision making.

In accordance with these Regulations, the Minister may approve substitution when the Minister is satisfied that:

1. the process to be substituted will include consideration of the factors set out in section 16 of the CEA Act (e.g. significance of adverse environmental effects);

2. the public will be given an opportunity to participate in the environmental assessment;

3. the public will have access to environmental assessment documents to enable their meaningful participation; and

4. at the end of the assessment, a report will be submitted to the federal responsible authority which will serve as the basis for federal decision making on the significance of the environmental effects of the project, and the report will be available to the public.

For projects subject to a federal environmental assessment, a provincial environmental assessment report prepared for a project under consideration for federal funding may be used by the federal authority to make decisions, provided the substitution of the process was approved by the Minister of the Environment.

For a project that would have been subject to a federal comprehensive study, federal participant funding will continue to be available during the conduct of the environmental assessment to facilitate public participation. It should be noted that current experience indicates that the projects covered by these Regulations rarely trigger the need for a comprehensive study type environmental assessment.

The Minister of the Environment will also retain the ability to refer a project to a review panel.

Regulatory and non-regulatory options considered

Administrative measures, such as providing proponents with greater guidance and assistance with the federal environmental assessment process, to help streamline and expedite the environmental assessment process were considered. However, administrative measures will not yield the same level of time efficiencies and cost savings that this regulatory package will produce. In addition, they would not address the fact that a number of smaller projects with insignificant environmental effects are being subjected to environmental assessments nor would they allow for the reduction in duplication between the federal and provincial processes.

Another alternative considered was to renew the current CEA Act. However, new legislation could not be in force in time to impact the approval of projects to be funded under the Building Canada plan over the next two years.

The regulations that make up this regulatory package were deemed to be the best option to provide the targeted adjustments to the federal environmental assessment process for certain infrastructure projects through existing legislative authority and under the existing legislative framework.

Benefits and costs

The regulations are expected to generate economic benefits to Canadians by facilitating earlier implementation of infrastructure projects; and by creating cost savings through reducing the number of federal environmental assessments required for infrastructure projects that pose insignificant adverse environmental effects. In turn, it will allow government resources to be focused on projects with the potential to cause significant adverse environmental effects. The regulations also reduce duplication with provincial processes.

It is important to note that the changes with respect to environmental assessment are just one of the regulatory and administrative measures being used to speed up the implementation of infrastructure projects and stimulate the economy. For example, there will be significant streamlining and simplification of the federal project review process, including funding criteria, under the Building Canada Fund. Changes to requirements under the Navigable Waters Protection Act are being contemplated, along with measures to streamline the application of the Fisheries Act.

Earlier investments, earlier benefits

An important benefit is the time that will be saved as a result of the regulations. Based on similar past infrastructure funding programs, environmental assessments of projects under the Communities Component of the Building Canada Fund, are estimated to generally take less than a year. For similar projects under the previous funding programs, 50% of the environmental assessments were completed in less than 6 months. For the remaining 50%, environmental assessments took anywhere from 6 to 12 months. Environmental assessments for the type of projects in the Major Infrastructure Component generally require 6 to 18 months to be completed. The development of infrastructure projects is a complex process. There are numerous elements that need to be done concurrently to accelerate a project. The time and resources previously allocated to completing the environmental assessment will now be available to accelerate other aspects of the project.

This time saving is intended to contribute to having infrastructure spending begin to flow earlier than would otherwise be the case, leading to broader economic benefits. These benefits are proportional to the total number of projects that will be exempted in the next two years and the funding allocated to them.

According to recent estimates prepared by Informetrica Limited for the Federation of Canadian Municipalities, the first year economic stimulus effects of a $1 billion increase in infrastructure spending would be to increase the size of the real economy by about 0.13% and add 11 500 jobs to overall employment. The macroeconomic effects of a $1 billion increase in funding in the subsequent year would be a 0.07 percentage point improvement in real GDP coupled with 10 700 more jobs. (see footnote 3)

The Government of Canada has committed to accelerate approval of a combined $1.9 billion in infrastructure projects beyond what was planned for the next two years (www.buildingcanada-chantierscanada.gc.ca/media/news-nouvelles/2009/20090116bgr-fiche2-eng.html).

These regulations, along with other measures, are expected to facilitate acceleration of more than $1 billion over the next two years under the Communities Component of the Building Canada Fund. With matching contributions by provincial and municipal governments, it is assumed that more than $3 billion in infrastructure spending under the Communities Component will be injected into the Canadian economy in 2009 and 2010.

Assuming that the $3 billion is equally distributed across 2009 and 2010, Informetrica’s macroeconomic stimulus estimates indicate that the acceleration of infrastructure spending could increase real GDP in 2009 by 0.21 percentage points and increase employment by over 18 600 jobs. In 2010, the economic stimulus effects could be an increase in real GDP of 0.11 percentage points and an increase of over 17 300 jobs.

Increased economic activity would also generate tax revenues for various levels of governments. As noted above, such benefits would be attributable to the suite of changes, including but not limited to those related to environmental assessment.

The impact on the economy varies with the kind of infrastructure asset being put in place. Analysis by Informetrica suggests that while differences are modest, the impacts of spending on buildings and transportation infrastructure would be largest. Sectors primarily affected would be the construction industry and other sectors in the related supply chain, including manufacturing.

Cost savings

Under the current suite of infrastructure funds, project proponents (including province and municipalities) are required to undertake a federal environmental assessment. While these are cost-shared (the cost of a federal environmental assessment is eligible for reimbursement up to 50%, depending on the agreement), these assessments do require a significant amount of time and traditionally have been out-sourced to consultants with expertise in federal environmental assessments. As a result of these regulations, there will be cost savings to proponents – both in terms of the actual conduct of these assessments, as well as staff time to review and approve. It is difficult to precisely estimate cost savings, since there is a vast range in the scope and scale of both projects and the cost of environmental assessments. A 1999 study estimated the average relative cost of screenings to be 2.9% (range of 0.4% to 7.6%) of project costs. (On-Going Monitoring Program of the CEA Act available at: http://www.ceaa-acee.gc. ca/013/001/0002/0002/bkstd05_e.htm). However, this study did not distinguish federal environmental assessment costs from provincial environmental assessment costs.

An interdepartmental committee of environmental assessment experts estimated that costs for federal environmental assessments of large projects would be less than 1% of project costs. For smaller projects, environmental assessment costs could range from 3% to 5% of project costs. These estimates appear reasonable compared to the 1999 estimates cited above for total federal and provincial environmental assessment costs (i.e. within the 0.4% to 7.6% range).

To determine potential cost savings of implementing the regulations, these cost estimates were applied to the estimated total spending under the Communities Component over the next two years, estimated above to be over $3 billion.

Most projects under the Communities Component are smaller projects, with environmental assessment costs estimated to fall within the 3% to 5% range as discussed above. This suggests that if federal environmental assessments were required for all projects under the Communities Component, potential costs for federal environmental assessments could range from about $100 million to over $150 million. Based on experience with similar previous programs, the regulations are projected to eliminate the need for most of those assessments, and it is estimated that the regulations have the potential to reduce costs over the next two years by at least this amount.

Additional savings will occur for infrastructure projects under other funding mechanisms (such as the Major Infrastructure Component, Gateways and Boarder Crossing, Asia-Pacific Gateway). Since the proportion is not known and is dependent on which projects come forward, these savings have therefore not been quantified.

Potential costs/risks

The potential costs or risks posed by the regulations are expected to be small.

The potential cost of the regulations is the risk of proceeding with a project that has negative consequences for the environment, without first completing a federal environmental assessment.

This risk is expected to be small because the exclusions are based on a history of environmental assessments that indicate the types of projects to be excluded have insignificant environmental effects. For non-excluded projects, there may be a substitution to a provincial process, but an environmental assessment meeting prescribed conditions is still conducted.

Rationale

The regulations in this regulatory package will achieve the goals of reducing unnecessary delays in delivering infrastructure projects, while maintaining environmental protection. They will build on and are consistent with ongoing efforts to improve the federal environmental assessment framework. The application is being targeted to those areas where most needed, i.e. projects funded under the Building Canada plan for the next two years. Even though a federal environmental assessment may not be required, projects that will be excluded will still be subject to all other applicable laws, including environmental laws.

The CEA Act requires environmental assessments to be conducted on any physical work, unless excluded. This “all-in unless out” approach means that a list of exclusions is necessary, and has been in place since the CEA Act was implemented. As well, the list of exclusions has been added to since then, notably in 2007, to ensure that assessments are not necessary for projects that cause little or no effect on the environment. Adding a number of classes of projects with insignificant effects to the exclusion list will focus environmental assessment efforts where they are most required. The requirement that measures be in place to protect environmentally sensitive areas, as part of some exclusions, enables additional projects to be excluded while providing environmental protection.

Enabling the substitution of provincial processes for the federal process will avoid duplication of processes, while ensuring the fundamental requirements of the CEA Act are met and federal decision making is retained. The regulations that allow for substitution are consistent with ongoing federal-provincial discussions to improve collaboration between federal and provincial environmental assessment systems, including identifying measures to support the concept of “one project-one assessment.” The concept of relying on other processes is a part of the current CEA Act, as well as being consistent with international practices in other jurisdictions such as Australia and the United States.

The regulations build on the concept of substituting another process which is already included in the CEA Act. The existing authority, under the CEA Act, enables the Minister of the Environment to approve the substitution of another environmental assessment process for a review panel. The regulations use similar conditions but apply to the screening and comprehensive study level of assessments only.

The regulations will help to achieve the goal of “one project-one assessment.” The conditions that will have to be met before the Minister of the Environment agrees to the use of a substituted process will ensure that the key requirements of a federal environmental assessment are met, and federal decision making at the end of the assessment is retained. The approval of the Minister will confirm that these conditions are met, and will enable federal coordination with the substituted process, as well the provision of expert advice into the substituted process.

Coordination and cooperation on the delivery of infrastructure projects will improve as a result of faster federal decisions. These federal decisions will also accelerate construction and flow federal money in a more timely fashion.

Consultation

While no specific consultations were undertaken on this urgent regulatory package, there were a significant number of high-level discussions on the need for such a package. Following the First Ministers’ Meeting in November, the Minister of Transport, Infrastructure and Communities, engaged in national consultations with his counterparts on the need to accelerate infrastructure investments, as well as the need to streamline federal legislative, regulatory and administrative practices to ensure that these much needed projects can be implemented in a timely fashion to offset the impacts of the global economic decline. Engaging in consultations specific to these regulatory changes would not enable the regulations to be in force in time to affect “shovel ready” projects that could be started in the 2009 and 2010 construction seasons.

The Regulatory Advisory Committee (RAC) is a long-standing multi-stakeholder body which provides advice to the Minister of the Environment and the Canadian Environmental Assessment Agency (the Agency) on regulatory and policy issues under the CEA Act. Its members include representatives from environmental organizations, national Aboriginal organizations, a variety of industries impacted by federal environmental assessment, provincial governments and federal departments. RAC is regularly consulted on a variety of regulatory and policy issues.

In past discussions with RAC on related issues, industry representatives have expressed concern about the inefficiency of subjecting a large number of relatively small projects to federal environmental assessment, and have been supportive of greater integration of federal and provincial environmental assessment processes. Environmental organizations have expressed the desire that cooperation between federal and provincial environmental assessment processes not lead to a lowering of environmental protection standards. While they are not opposed to excluding projects from requiring environmental assessment under the Exclusion List Regulations, 2007, environmental organizations have, in the past, expressed concerns related to the potential cumulative environmental effects of many small projects not being subject to federal environmental assessments.

Implementation, enforcement and service standards

There is no formal compliance or enforcement mechanism applicable to the CEA Act or its regulations. As with the CEA Act, the regulations are based on the principle of self-assessment; that is, when a federal authority has a decision to make about a project, it will be responsible for determining whether an environmental assessment is required and if so, for ensuring that it is conducted in accordance with the CEA Act and its regulations.

However, the Agency does have a role in promoting and monitoring compliance with the CEA Act and its regulations. The Agency assists federal authorities in meeting their obligations through the issuance of guidance and the provision of training. In addition, Agency staff is available to assist federal authorities when required.

With respect to the substitution of the federal process by a provincial process, the Minister of the Environment will have that decision-making authority and will need to be satisfied that provincial processes meet the prescribed conditions before authorizing any substitution. Responsible authorities may participate in the provincial environmental assessment process to ensure that they have the information required to make their environmental assessment decision.

The regulations will be in effect until March 31, 2011.

Contact

John Smith
Director
Legislative and Regulatory Affairs
Canadian Environmental Assessment Agency
160 Elgin Street, 22nd Floor
Ottawa, Ontario
K1A 0H3
Telephone: 613-948-1942
Fax: 613-957-0897
Email: John.smith@ceaa-acee.gc.ca

Footnote a
S.C. 2003, c. 9, s. 29(2)

Footnote b
S.C. 2003, c. 9, s. 29(2)

Footnote c
S.C. 1992, c. 37

Footnote 1
SOR/2007-108

Footnote 2
Consult the Questions and Answers provided on the Canadian Environmental Assessment Agency’s Web site at http://www.ceaa.gc.ca/010/basics_e.htm to learn more about federal environmental assessment and the CEA Act.

Footnote 3
Sonnen, Calr (2008). Municipal Infrastructure: Macroeconomic Impacts of Spending and Level-of-Government Financing. Prepared for the Federation of Canadian Municipalities by Informetrica Limited, May 31, 2008. Tables 1 and 4. <www.fcm.ca//CMFiles/Final Informetrica1LUG-5312008-7682.pdf>