October 4, 2004

Smart regulation strategy advocates co-operative, nationally integrated EA process

The time has come for Canada to move beyond harmonization toward a nationally integrated environmental assessment (EA) process in which the federal, provincial and territorial governments would collaborate as equal partners. A renewed call for a more efficient, timely and co-ordinated EA process is one of the highlights of a new regulatory strategy for Canada proposed by a federally-appointed External Advisory Committee on Smart Regulation (EACSR).

Co-operation - among government, industry and citizens - is at the heart of the strategy, detailed in the Committee's just-released report, Smart Regulation: A Regulatory Strategy for Canada. The EACSR's findings and recommendations are the result of 15 months of extensive research, consultations and meetings on the state of Canada's regulatory system. Throughout its consultation process, the Committee observed strong support by a diverse range of stakeholders for immediate action on regulatory reform.

"Their interest and collaborative spirit showed us that co-operation is not only possible, but essential to our vision for a new regulatory strategy for Canada," said EACSR chair Gaetan Lussier. "Our report is essentially a call to action. It represents our best advice to modernize Canada's regulatory approach so that the social, environmental and economic benefits associated with effective regulation can be fully realized," he added.

Smart regulation is about finding better, more effective ways to provide a high level of protection, promote the transition to sustainable development and foster a dynamic economic climate conducive to innovation and investment. All this, says the Committee, must exist in a system that sets clear policy objectives and is timely, transparent and predictable - one that builds public trust in the quality of Canadian regulation and the integrity of the process. The recommendations contained in the EACSR's report provide guidance on how to achieve these goals.

The environmental assessment (EA) process, says the report, was one of the issues about which the Committee heard the most complaints, and it was viewed as a high-priority area for regulatory reform by industry and environmental organizations alike. One of the most consistent concerns about the process was the lack of effective co-ordination, both within the federal government and among orders of government.

In making its recommendations concerning the EA process, the Committee acknowledges the recent (2003) amendments to the Canadian Environmental Assessment Act. It notes, however, that there is not yet enough evidence to assess how well the revisions address EA issues, and suggests that the Canadian Environmental Assessment Agency should fast-track implementation of the CEA Act amendments.

At the same time, however, the Committee believes that improved co-ordination and faster implementation of the new legislation would proceed slowly and would improve the current situation only marginally. Accordingly, it recommends that the federal government begin discussions with provincial and territorial governments to develop a national integrated approach to EA encompassing federal, provincial and territorial processes. This concept, notes the report, was generally supported both by industry representatives and non-government organizations during the consultations.

Specifics surrounding this recommendation call for:

*one set of documents to be prepared per project, to be used by all government organizations involved;

*one hearing, one time per project to be held (when required);

*clear timelines for the steps in the EA process to be set out at the beginning of a project and respected throughout the process;

*all triggers for the EA process to be identified at the outset, to allow concurrent - if not single - processes to take place; and

*multiple assessments on a single project to be conducted concurrently, rather than sequentially.

In addition to accelerating the amendments to the CEA Act, the Committee further recommends that the government establish a single federal agency to be responsible for carrying out environmental assessments under federal jurisdiction (rather than having many departments involved in EAs) and to collaborate with other orders of government.

As a single window for the federal government, says the report, this agency would provide a simpler, more effective process for project proponents and other interested parties. At the same time, it adds, the federal government should work with the provinces and territories to improve the operation of current co-operative EA agreements.

The CEA Act has always included a provision allowing the Minister of Environment to substitute the public hearing process of another federal authority for an environmental review panel, where the Minister is satisfied that the substituted process meets the conditions set out in the act. The Committee recommends that the Canadian Environmental Assessment Agency and potential substitute authorities (such as the National Energy Board) negotiate an agreement to enable substitution when an EA by a review panel and other project approval processes are both required.

The contribution of EAs to protecting natural ecosystems and improving the sustainability of projects must become more measurable and transparent to project proponents, affected communities and other stakeholders, adds the report. Accordingly, it recommends that specific targets, performance measures and indicators for measuring a project's environmental impacts and the effectiveness of mitigation measures be considered essential elements of EAs. This approach, it explains, would incorporate lessons learned from past assessments, post-approval audits and reports on monitoring.

The EASCR's review shed light on a number of concerns related to EAs conducted through the federal Fisheries Act which, it noted, represents a significant trigger for an EA when a project could damage fish habitats. Particularly affected by these challenges are hydroelectric generation and transmission projects. Fisheries and Oceans Canada (DFO) has signed a memorandum of understanding with the Canadian Electricity Association and has developed an overall plan to resolve the issues. The Committee recommends that DFO accelerate its implementation of planned improvements to its fish habitat system and related involvement in EA.

The scope and complexity of EAs, notes the report, should reflect a project's nature and inherent risk. Thus, it says, risk management principles should be used to focus the government's efforts on assessing projects with potentially greater risk to the environment, while taking into account the impacts of small projects which can pose greater risks.

The Committee recommends that the Comprehensive Study List regulations under the CEA Act be reviewed to ensure that the greater complexity of the process (compared with screening) would result in improved environmental protection. It suggests as well that consideration be given to modifying the list of projects or altering thresholds where experience has demonstrated that a comprehensive study is warranted because there is a potential for significant adverse environmental effects.

In addition to the EA process, The Committee's recommendations for applying smart regulation to specific areas focus on manufacturing and product approval; biotechnology and life sciences; oil and gas exploration and development; enabling First Nations economic development.

Overall, the proposed regulatory strategy for the 21st century focuses on co-operation within the federal government and between Ottawa and other jurisdictions, as well as on risk management and regulatory tools and processes. Some key recommendations in these areas follow.

International Regulatory Co-operation: The federal government should include international regulatory co-operation as a distinct component of Canadian foreign policy, making North America the primary and immediate focus of international regulatory efforts, says the report. International approaches should be adopted wherever possible, with specific Canadian regulatory requirements limited to where they are needed to support an important national priority, Constitutional values or unique Canadian circumstances.

Federal-Provincial-Territorial Regulatory Co-operation: Urgent attention is needed to creating a more seamless regulatory environment in Canada. The EACSR calls for First Ministers to formalize inter-jurisdictional co-operation through a new negotiated joint arrangement between the federal and provincial/territorial governments focusing on key priorities, beginning with the environmental assessment process.

Federal Regulatory Co-operation: Within the federal government, better co-ordination among departments and agencies is essential. The government should create overarching strategic frameworks with clearly stated policy objectives. These, says the report, would support interdepartmental discussion and foster the development of government-wide regulatory positions, leading to coherent and integrated regulatory action.

Risk Management: The federal government should develop a government-wide approach to risk prioritization, risk assessment, and risk communication.

Regulatory Instruments: The Committee recommends that the federal government develop a new federal regulatory policy to guide the design and use of instruments. It should eliminate legislative constraints on creating mixes of policy instruments and using performance-based regulations, adds the report. Other proposed measures call for the government to:

* consider expanding the appropriate use of economic instruments;

* develop performance measurement and compliance and enforcement plans for new regulation;

* improve its consultation practices;

* devise approaches for the more timely development of regulation;

* put in place independent recourse mechanisms to provide stakeholders an opportunity to challenge regulatory performance and decisions; and

*establish task teams for industry sectors or regulatory areas to lead regulatory reform processes.

In addition to Gaetan Lussier, members of the EASCR included: David Runnalls, president of the International Institute for Sustainable Development, in Winnipeg; Dr Robert Church, professor emeritus of medical biochemistry and molecular biology at the University of Calgary's Faculty of Medicine in Airdrie; Robert Wright, deputy chair of Teck Cominco; Richard Drouin, head of Abitibi Consolidated's board of directors; Scott Jacobs, managing director of Jacobs and Associates and former head of the OECD program on regulatory reform; Bernd Christmas, CEO of the Membertou First Nation in Membertou, Nova Scotia; Louise Rozon, director of Option Consommateurs, in Candiac, Quebec; Hydro One chair Rita Burak; and Calgary-based corporate director Raymond Woods.

The Smart Regulation for Canada report may be viewed on the EACSR's Web site, www.smartregulation.gc.ca.

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