‘One project, one review, completed in a clearly defined time period’: Excerpt from Budget 2012

The Canadian government announced major changes to the way projects are approved during the 2012 budget speech.

“We will streamline the review process for such projects, according to the following principle: one project, one review, completed in a clearly defined time period,” said Finance Minister Jim Flaherty on Thursday while announcing the budget in the House of Commons.

Here is an extended excerpt from Chapter 3.2 of Budget 2012 explaining changes to how resource projects are approved:

Responsible Resource Development

Major economic projects create jobs and spur development across Canada. In 2010, natural resource sectors employed over 760,000 workers in communities throughout the country. In the next 10 years, more than 500 major economic projects representing $500 billion in new investments are planned across Canada. A significant element of this economic boost is represented by Canada’s unique oil sands industry, which employs over 130,000 people while generating wealth that benefits all Canadians. This contribution is increasing: a recent study by the Canadian Energy Research Institute estimates that in the next 25 years, oil sands growth will support, on average, 480,000 jobs per year in Canada and will add $2.3 trillion to our gross domestic product. Increasing global demand for resources, particularly from emerging economies, will create new economic and job opportunities from which all Canadians will benefit.

Canadians will only reap the benefits that come from our natural resources if investments are made by the private sector to bring the resources to market. Yet those who wish to invest in our resources have been facing an increasingly complicated web of rules and bureaucratic reviews that have grown over time, adding costs and delays that can deter investors and undermine the economic viability of major projects.

To maximize the value that Canada draws from our natural resources, we need a regulatory system that reviews projects in a timely and transparent manner, while effectively protecting the environment. The Government recognizes that the existing system needs comprehensive reform. The Government will bring forward legislation to implement system-wide improvements to achieve the goal of “one project, one review” in a clearly defined time period. Economic Action Plan 2012 proposes to streamline the review process for major economic projects, support consultation with Aboriginal peoples, and strengthen pipeline and marine safety.

Modernizing the Regulatory System for Project Reviews

The Government will propose legislation to streamline the review process for major economic projects.

Since 2006, the Government has been working to streamline the review process for major economic projects so that projects proceed in a timely fashion while protecting the environment. For example, in 2010 the Government amended the Canadian Environmental Assessment Act to allow assessments to start sooner and reduce duplication, and created participant funding programs to ensure meaningful public engagement in the review process.

These steps have made a difference, but more needs to be done. Currently, companies undertaking major economic projects must navigate a complex maze of regulatory requirements and processes. Approval processes can be long and unpredictable. Delays and red tape often plague projects with few environmental risks. Under the current system, thousands of smaller projects with little or no risk to the environment are caught up in the federal environmental review process. The types of small projects that can be needlessly subjected to lengthy reviews include construction of a new pumping house for the expansion of a maple syrup plant, and the replacement of an existing culvert under a causeway. By forcing these thousands of low-risk projects to go through the review process, the current system draws resources away from projects that have the greatest impact on the environment. This approach is not economically sound or environmentally beneficial.

In the federal government alone, accountability for assessments rests with dozens of departments and agencies, each with its own mandate, processes, information needs and timelines. This leads to duplication and a needless waste of time and resources. For example:

• Enbridge proposed a new $2-billion pipeline connecting Hardisty, Alberta to Gretna, Manitoba. Due to multiple approval processes, federal departments made their decisions on the project two years after the National Energy Board’s approval of the project.
• Areva Resources Canada has proposed the construction and operation of a uranium mine and mining facilities in northern Saskatchewan, with capital investment of up to $400 million and up to 200 construction jobs. There was a 19-month delay in starting the environmental assessment. The federal lead department changed midway through the environmental review, which added unnecessary complexity.
• The NaiKun Wind Energy Group is proposing to develop a 396-megawatt offshore wind energy project in Hecate Strait off the northeast shores of Haida Gwaii in British Columbia. The company estimates that the project would have a capital investment of $1.6 billion and would create up to 200 construction jobs. The federal decision to approve the process came 16 months after the provincial decision.

The starting point of federal environmental assessments can also be unpredictable, which can cause lengthy delays. The Rabaska Partnership, for instance, is proposing to construct and operate a liquefied natural gas terminal near Beaumont and Lévis, Quebec, including a marine jetty to receive tankers, on-shore facilities, and a new 50-kilometre pipeline to connect to existing natural gas transmission networks. It took almost two years before the federal panel began its review. Similarly, the federal environmental assessment for the project began 10 months after Canpotex Terminals Limited and Prince Rupert Port Authority submitted a project description proposing to construct a 13-million-tonnes-per-year potash export terminal with a deepwater marine wharf in Prince Rupert, British Columbia. The proponents estimate that the project would have a capital investment of $750 million and would create up to 800 jobs during construction.

A further complication is overlapping federal and provincial regulatory requirements and processes that require a high degree of coordination. For example, an application for the Joslyn North Mine Project, an oil sands mine located in northern Alberta, was submitted to the Province of Alberta in 2006. A federal environmental assessment did not begin until 2008 and a decision to approve the project was issued by the responsible federal department in December 2011. The Lower Churchill Generation Project includes two hydroelectric power generating facilities on the lower section of the Churchill River in Labrador. A description of the project was submitted to the federal and provincial governments in 2006, an environmental assessment began in 2007 and the responsible federal departments approved the project in March 2012. Under a modernized regulatory review system, defined timelines will apply to environmental assessments, including for panel reviews of projects such as the Lower Churchill Generation Project.

A positive area of cooperation between the federal government and provinces was the conclusion in 2011 of the Canada-Quebec Accord for the shared management of offshore petroleum resources. By clarifying the roles and responsibilities of each level of government, this Accord will allow for the development of oil and gas resources in the Gulf of St. Lawrence, creating jobs and economic development while protecting fisheries and the environment.

A modern regulatory system should support progress on economically viable major economic projects and sustain Canada’s reputation as an attractive place to invest, while contributing to better environmental outcomes.

Increased resource development activities can also offer new opportunities for Aboriginal businesses and can generate well-paying jobs for Aboriginal peoples near their communities. There are steps the Government can take to improve consultations with Aboriginal peoples when it contemplates conduct that might affect potential or established Aboriginal or Treaty rights.

The Government will focus on four major areas to streamline the review process for major economic projects:

• Making the review process for major projects more predictable and timely.
• Reducing duplication and regulatory burden.
• Strengthening environmental protection.
• Enhancing consultations with Aboriginal peoples.

The Government will propose legislation to modernize the federal regulatory system that will establish clear timelines, reduce duplication and regulatory burdens, and focus resources on large projects where the potential environmental impacts are the greatest.

These measures will accelerate project development and directly lead to the creation of high-paying, high-quality jobs including for engineers, tradespeople and other skilled workers. The resulting economic activity will stimulate additional job creation across the country.

Major Projects Management Office Initiative

Economic Action Plan 2012 proposes $54 million over two years to renew the Major Projects Management Office initiative.

The Major Projects Management Office initiative has helped to transform the approvals process for major natural resource projects by shortening the average review times from 4 years to just 22 months, and improving accountability by monitoring the performance of federal regulatory departments. More than 70 major projects are currently benefitting from the system-wide improvements made possible by the initiative (see map). To continue to support effective project approvals through the Major Projects Management Office initiative, Economic Action Plan 2012 proposes $54 million over two years.

Major Economic Projects Benefitting From the Major Projects Management Office Initiative

Horn River Natural Gas Pipeline (British Columbia)
The Horn River Natural Gas Pipeline project connects natural gas supply from northeastern British Columbia to an existing pipeline infrastructure. The Major Projects Management Office initiative coordinated the federal review of the project and approval was granted in February 2011, 17 months after receiving the description of the project.

Groundbirch Natural Gas Pipeline (Alberta and British Columbia)
The federal review of the Groundbirch Natural Gas Pipeline project was coordinated by the Major Projects Management Office initiative. A description of the pipeline, which would cross from Alberta into British Columbia, was submitted to the Office in November 2008 and the project was approved within 17 months in April 2010.

Bakken Oil Pipeline (Manitoba and Saskatchewan)
The Bakken Oil Pipeline, which will transport oil from Saskatchewan to Manitoba, was approved by the federal government within 17 months in March 2012. The review of the project, which was expected to trigger statutory and regulatory obligations for several departments, was coordinated by the Major Projects Management Office after receiving a project description in October 2010.

Detour Lake Gold Mine (Ontario)
Approval for the Detour Lake Gold Mine project was granted by the Minister of the Environment in December 2011. A description of the open-pit mine project, which would be located in northeastern Ontario, was submitted in October 2009. The Major Projects Management Office coordinated the review of the project, which was expected to trigger statutory and regulatory obligations for Fisheries and Oceans Canada, Natural Resources Canada and Transport Canada, and the review of the project was completed in 14 months.

Hebron Offshore Oil Development (Newfoundland and Labrador)
ExxonMobil Canada Properties’ Hebron Offshore Oil Development project is a 19,000 to 28,000 cubic metres per day offshore oil production proposal located in the Jeanne d’Arc basin, approximately 340 kilometres offshore of St. John’s. The proposal consists of an offshore oil production system and associated facilities. A project description was submitted in March 2009 and the review was completed in January 2012.

Matoush Uranium Exploration (Quebec)
The Matoush Uranium Exploration Ramp Access project involves the excavation of an exploration ramp to determine the possibility of a uranium mine within the James Bay and Northern Quebec Agreement territory located approximately 260 kilometres north of Chibougamau in Quebec. The project consists of a 2,405-metre ramp, at a maximum depth of 300 metres. Temporary structures will be built at the surface to support the underground exploration. The project description was submitted in September 2008 and the review was completed February 2012.

Consultation Under the Canadian Environmental Assessment Act

Economic Action Plan 2012 proposes $13.6 million over two years to support consultations with Aboriginal peoples.

The Government is committed to consulting with Aboriginal peoples in the review of projects to ensure that their rights and interests are respected. Consultations can also facilitate discussions on how Aboriginal peoples can benefit from the economic development opportunities associated with these projects. To support consultations with Aboriginal peoples related to projects assessed under the Canadian Environmental Assessment Act, Economic Action Plan 2012 proposes $13.6 million over two years to the Canadian Environmental Assessment Agency.

Supporting Responsible Energy Development

Economic Action Plan 2012 proposes $35.7 million over two years to support responsible energy development.

Safe navigation of oil tankers is very important to our Government. Oil tankers have been moving safely and regularly along Canada’s West Coast since the 1930s. For example, 82 oil tankers arrived at Port Metro Vancouver in 2011. Nearly 200 oil or chemical tankers visited the Ports of Prince Rupert and Kitimat over the past five years. They all did so safely.

Oil tankers in Canada must comply with the safety and environmental protection requirements of international conventions and, while in Canadian waters, with Canada’s marine safety regulatory regime. These requirements include double hulling of ships, mandatory pilotage, regular inspections and aerial surveillance.

Any tanker built after July 6, 1993, must be double hulled to operate in Canadian waters. A double hull is a type of hull where the bottom and sides of a vessel have two complete layers of watertight hull surface. Tankers that are not double hulled are being gradually phased out. And, for large crude oil tankers, the phase-out date for single hulled vessels—like the Exxon Valdez—was 2010, which means that all large crude tankers operating in our waters today are double hulled.

In compulsory pilotage areas, the Pacific Pilotage Authority requires tanker operators to take a marine pilot with local knowledge onboard before entering a harbour or busy waterway. In special circumstances, more stringent measures may be taken, including: requiring two pilots onboard oil tankers; escort tugs; additional training standards; and navigational procedures, restrictions and routing measures.

Transport Canada also targets high-risk vessels entering Canadian ports. The department’s ship inspectors board and inspect foreign vessels, including oil tankers, entering Canadian ports to ensure they comply with all of our rules. In 2011, almost 1,100 inspections were carried out across Canada, 147 of them on oil tankers.

Economic Action Plan 2012 proposes further measures to support responsible energy development, including:

• New regulations which will enhance the existing tanker inspection regime by strengthening vessel inspection requirements.
• Appropriate legislative and regulatory frameworks related to oil spills, and emergency preparedness and response.
• A review of handling processes for oil products by an independent international panel of tanker safety experts.
• Improved navigational products, such as updated charts for shipping routes.
• Research to improve our scientific knowledge and understanding of marine pollution risks, and to manage the impacts on marine resources, habitats and users in the event of a marine pollution incident.

These measures will ensure that pipelines in Canada are carefully monitored, environmental consequences are understood and emergency response is improved. Economic Action Plan 2012 proposes $35.7 million over two year to further strengthen Canada’s tanker safety regime and support responsible development.

Strengthening Pipeline Safety

Economic Action Plan 2012 proposes $13.5 million over two years to strengthen pipeline safety.

The National Energy Board is an independent federal agency established to regulate international and interprovincial aspects of the oil, gas and electric utility industries, including international and interprovincial pipelines. To increase the number of inspections of oil & gas pipelines from about 100 to 150 inspections per year, and double from 3 to 6 the number of annual comprehensive audits to identify issues before incidents occur, Economic Action Plan 2012 proposes $13.5 million over two years to the National Energy Board. Funding for these activities will be fully cost-recovered from industry.

The Northern Pipeline Agency

Economic Action Plan 2012 proposes $47 million over two years to the Northern Pipeline Agency.

The Northern Pipeline Agency was created as a single window regulatory body to oversee the planning and construction of a major pipeline—the Alaska Pipeline—to transport natural gas from Alaska through Canada to the lower 48 U.S. states. To carry out federal regulatory responsibilities related to the Alaska Pipeline Project, Economic Action Plan 2012 proposes $47 million over two years to the Northern Pipeline Agency. This funding will be fully cost-recovered from industry.

Amending Mining Regulations

Economic Action Plan 2012 proposes $1 million over two years to amend metal mining regulations.

Environment Canada is responsible for administering the key pollution prevention provisions under the Fisheries Act, including the associated Metal Mining Effluent Regulations. These regulations prescribe controls on the effluents and waste rock that can be deposited into certain bodies of water.

To address an existing regulatory gap and provide greater certainty for the mining industry in Canada, Economic Action Plan 2012 proposes $1 million over two years to Environment Canada to expand Metal Mining Effluent Regulations to non-metal diamond and coal mines.

Investing in Our Natural Resources

Canada’s rich natural resources contribute to jobs and growth in communities across the country. The energy and mining sectors accounted for nearly 10 per cent of Canada’s gross domestic product (GDP) in 2010, and employed nearly 580,000 workers. Economic Action Plan 2012 announces new and renewed measures in support of energy and mineral exploration.

Supporting Junior Mineral Exploration

Economic Action Plan 2012 proposes to extend the temporary 15-per-cent Mineral Exploration Tax Credit for flow-through share investors for an additional year.

The temporary 15-per-cent Mineral Exploration Tax Credit for flow-through share investors helps junior exploration companies raise capital by providing an incentive to individuals who invest in flow-through shares issued to finance mineral exploration. This credit is in addition to the regular deduction provided for the exploration expenses “flowed through” from the issuing company.

The credit is scheduled to expire on March 31, 2012. However, given ongoing global uncertainty and in support of the exploration efforts of junior exploration companies, Economic Action Plan 2012 proposes to extend the credit for an additional year, until March 31, 2013.

It is estimated that the extension of this measure will result in a net reduction of federal revenues of $100 million over the 2012–13 to 2013–14 period.

Supporting Offshore Oil & Gas Exploration

Economic Action Plan 2012 proposes to amend the Coasting Trade Act to improve access to modern, reliable seismic data for offshore resource development.

Offshore oil & gas developments create jobs and support economic growth in Canada’s communities. Continued exploration activity is required to bring new projects to communities and sustain these economic benefits over the long term and depends on modern, reliable seismic technology and data. To advance exploration for new developments, Economic Action Plan 2012 proposes to amend the Coasting Trade Act to improve access to modern, reliable seismic data for offshore resource development. This will ensure private sector companies have the information they require to identify potential resource development opportunities.

Assessing Diamonds in the North

Economic Action Plan 2012 proposes $12.3 million over two years to continue to assess diamonds in the North.

The natural resource sector in Canada’s North provides significant employment and business opportunities for Aboriginal peoples and communities. The Diamond Valuation and Royalty Assessment Program, operated by Aboriginal Affairs and Northern Development Canada, ensures that Canadians and Northerners benefit from the royalties associated with diamond production in the region. To renew the Diamond Valuation and Royalty Assessment Program, Economic Action Plan 2012 proposes $12.3 million over two years to Aboriginal Affairs and Northern Development Canada.