Canada’s Environmental Assessment Speeds Up
The leader of Canada’s Green Party, Elizabeth May, never ceases to amaze with her vitriol demonizing China in everything from human rights to past Canadian government supported business dealings with the country. In her latest tirade on the party’s website, she links the environment assessment portions of the Harper government’s omnibus budget implementation Bill C-38 that just passed parliament to nefarious Chinese intents in Canadian oil and gas.
In the post, she blasted: “Chinese money is already invested in the Enbridge pipeline and tanker scheme, PetroChina wants to build the pipeline, and Suncor is talking about using lower waged Chinese temporary workers – just in time to drive down wages and environmental standards…And now Sinopec’s 9% share in Syncrude has given it veto power over any future decision to refine Syncrude bitumen in Canada.”
She accuses the Harper government of selling out Canadian values and interests to the Chinese who trample on human rights, workers’ rights, and environmental protection. What has Bill C-38 got to do with China’s human rights situation? And how does Sinopec’s 9% share in Syncrude give it veto power? Her remarks pander to China-haters among her constituency and points to the embarrassing fact that her party is the perpetual oppositionist that will never wield power to practice actual government. But, enough said about her adolescent outbursts.
The importance of Bill C-38 is the message about closure in environment assessment it sends to investors, domestic and foreign, and how the overhaul of Canada’s environmental review process impinges on major projects such as the Northern Gateway Pipeline. The May and July Blakes bulletins published by the Blake, Cassels & Graydon LLP law firm provides a detailed look at key changes to the Canadian Environmental Assessment Act (new Act) that came into being earlier this month.
The Canadian Environmental Assessment Agency’s (CEAA) new regulations (to be entered into the Canada Gazette this week) determine new thresholds for federal environmental assessment to focus on the largest and most impactful projects and activities. Only categories of projects that would have required comprehensive studies will be assessed.
A major reform involves screenings and time limits. Screenings under the old Act will be continued only by special order from the Minister of the Environment with all other federal screenings suspended. Decisions on standard assessments are generally required to be made within a year of issuance. In cases involving a public review panel, decisions must be issued within two years. Under special circumstances, extensions may be allowed for up to three months.
But, it remains to be seen how the transitional provisions under the new Act will work for Northern Gateway. The joint review committee for the project was established in December 2009 with final hearings to begin in the fall but a decision unlikely until well into 2013. Since the new 2 year time limit for panel reviews has already expired, it remains unclear how the new regulations will affect Northern Gateway.
The new Act has resulted in the number of projects subject to federal assessment to plummet precipitously. Prior to the new Act, there were over 2900 screenings, 26 comprehensive studies, and 9 panel reviews (as of April 2010). Following the new Act, including screenings transitioned under ministerial order, there are only 70 projects subject to federal assessment.
Although Enbridge is a long way from selecting contractors for Northern Gateway, PetroChina is interested in building the $5.5 billion pipeline and considering taking an equity stake. PetroChina is very experienced in building and operating pipelines, able to provide a big skilled workforce at much cheaper costs, so they are expected to submit a very competitive bid. At the same time, however, Chinese companies are frustrated with Canada’s convoluted environmental assessment process. In their eyes, the old process had reduced Canada’s attractiveness as an investment destination.
China is the world’s second-biggest oil consumer that will eventually surpass the US. Following Obama’s delayed decision on the Keystone XL Pipeline, the Harper government and the oil industry is increasingly looking to China and other Asian countries as supplemental alternative markets. Thus, despite intense and often misguided criticism from the green lobby, speeding up environmental review under the new Act is a positive sign that Canada is getting serious about foreign involvement in the oil and gas industry.