Opinion: Latest changes help but project reviews need still more certainty

Bill C-39, the “Building Canada Strong Act,” which the federal government tabled in Parliament last month, does improve the country’s laws on project approvals, but there is more Ottawa could do to create real and lasting certainty for investors.

Though the bill makes changes in six separate acts, what’s most important are four changes to the Impact Assessment Act, which in some circles became known as the “No more pipelines act.”

C-39 adds the Canadian Nuclear Safety Commission (CNSC) and Canada Energy Regulator (CER) as responsible authorities to conduct an impact assessment for activities regulated under the Nuclear Safety and Control Act. Empowering the CNSC and CER to lead, and in some cases make the final decision on impact assessments for nuclear, uranium and pipeline projects ensures expert regulators lead these processes and removes the requirement for a joint review panel with the Impact Assessment Agency. In practice, it’s also likely to speed things up simply because the CER, for example, consistently delivers applications on time. A recent C.D. Howe Institute report found that review panels are the most time-consuming type of impact assessment.

A second big change is to allow enabling work to begin on projects even before the government issues a decision. In theory, this will reduce the time between application and construction, which means also reducing the time before proponents start realizing revenues and profits. In practice, however, proponents may want to await final approval to reduce the risk of legal challenges from impacted communities.

Bill C-39 also significantly reduces time limits for reviews. For example, where the current IAA has a time limit of three years for proponents to provide all necessary documentation, Bill C-39 mandates 365 days. And it wants assessments completed in 300 days, with the possibility of reducing that. By contrast, the IAA allows the option of lengthening the process. Of course, time limits can always be extended. Meeting them relies on proponents providing complete submissions upfront and regulators and agencies leveraging institutional knowledge and past assessments to streamline delivery of recommendations and conditions.

Finally, impact assessment decisions will now include required authorizations from other federal agencies and departments. It is not quite clear in reality how these authorizations can be approved using project information received from proponents for their impact assessments unless project proponents collect much more detailed information upfront. But this change seems likely to force improved coordination and information-sharing between the Impact Assessment Agency and federal departments responsible for those authorizations, and that’s a positive development.

Shortening timelines is only one piece of the regulatory puzzle, however. Considerable uncertainty remains because approvals are increasingly political, assessments involve a long list of criteria unrelated to direct project impacts and there’s always the risk of litigation.

The IAA still requires ministerial or Cabinet approval of projects, which puts projects at the mercy of politics. And both the Impact Assessment Act and Canadian Energy Regulator Act involve long lists of factors against which proponents are assessed — including many policy and ideological objectives that don’t belong in such reviews (like climate change, sustainability and the intersection of sex and gender with other identity factors). Hearings and assessments can still end up focusing on essentially tangential effects rather than projects’ more direct effects on the environment, safety, and Indigenous consultation. Time-constrained hearings on ill-defined effects could easily bring legal challenges from impacted communities.

The so-called “duty to consult” is not a veto on projects, but many Indigenous Nations are already over-capacity when it comes to engagement and consultations. A Crown Consultation Hub, proposed as part of the Cabinet directive released alongside C-39, is a positive development, but Bill C-39 will certainly test the Crown’s ability to fulfill its duty within the shortened timelines.

Bill C-39’s changes should be just the beginning of a much-needed overhaul of Canada’s regulatory system. There are still serious problems regarding certainty for proponents and investors, including litigation risk. Depoliticizing reviews, focusing on direct project effects and increasing the Crown’s ability to fulfill its duty to consult would make Canada’s regulatory system more predictable and durable.

Kate Koplovich, an energy economist, leads the Energy Research Program at the C.D. Howe Institute.