Vol. 142, No. 24 — June 14, 2008

Regulations Amending the Exemption List Regulations

Statutory authority

Mackenzie Valley Resource Management Act

Sponsoring department

Department of Indian Affairs and Northern Development

(This statement is not part of the Regulations.)

Issue

Firstly, the Mackenzie Valley Resource Management Act has been judicially interpreted to require a preliminary screening of an application for a component of a development even though that component of the development was included in a previous environmental assessment or environmental impact review. This will result in considerable duplication, inefficiency and expense for the regulatory system in the Mackenzie Valley including, potentially, more than one environmental assessment for the same development.

Secondly, the definitions of “hazardous material,” “national historic site,” “national park” and “national park reserve” in the Exemption List Regulations include references to legislation that have undergone changes in the period since the Exemption List Regulations were made in December 1998.

The first issue stems from the case of a development by Paramount Resources Ltd., in the Cameron Hills area of the Northwest Territories, where a regulator exempted the permit application from preliminary screening and issued an authorization, because that part of the development had previously been subject to an environmental assessment. This was successfully challenged in the Supreme Court of the Northwest Territories (Chicot v. Paramount Resources Ltd. et al., 2006 NWT SC 30). The Court found that the regulator acted incorrectly because the correct interpretation of the subsection 124(1) of the Mackenzie Valley Resource Management Act is that each new application for a development or part thereof, be subject to a preliminary screening regardless of whether that development had been previously subject to an environmental assessment.

The body conducting such a preliminary screening may not be able to reconcile the “might” test for requiring a referral to the Mackenzie Valley Environmental Impact Review Board (Review Board) with the outcome of the previous environmental assessment or environmental impact review. In both of these situations it is the “likelihood” of adverse environmental effects or public concern that is considered, not whether there “might” be adverse effects or public concern. In addition, the Ministers’ decision following an environmental assessment could result in a development proceeding notwithstanding environmental impacts or public concern. There is a strong possibility that the body conducting the preliminary screening would find that future applications for this development “might” have a significant adverse impact or be a cause of public concern which would require a referral of the development for another environmental assessment.

Objectives

The objective of the proposed amendments to the Exemption List Regulations is to allow regulators to apply the exemption to activities that are considered to be part of a development that has already been the subject of a higher level of assessment. This proposal would not effect the ability, pursuant to subsection 126(2) of the Mackenzie Valley Resource Management Act, of the Gwich’in or the Sahtu First Nations, the Tlicho Government, a regulatory authority, a department or an agency of the federal or territorial government, or a local government to make a referral of the development to the Review Board for an environmental assessment. In addition, pursuant to subsection 126(3) of the Mackenzie Valley Resource Management Act, the ability of the Review Board to undertake an environmental assessment under its own motion would be unaffected.

The second set of proposed amendments will update the definitions in the Exemption List Regulations in order to maintain consistency with legislative changes that have occurred over the past decade.

Description

Two sets of amendments of the Exemption List Regulations pursuant to paragraph 143(1)(c) of the Mackenzie Valley Resource Management Act are being proposed. The first set of amendments create an exemption from the requirement for a preliminary screening where an application for a licence or other authorization is for an activity that is part of a development that has already been the subject of an environmental assessment by the Review Board or of an environmental impact review by a review panel.

The second set of amendments address the technical issues raised by the Standing Joint Committee for the Scrutiny of Regulations related to updating the references to other statutes in a number of the definitions.

Regulatory and non-regulatory options considered

Several options were explored to address the potential duplication of environmental assessments under the Mackenzie Valley Resource Management Act.

The remedy the court suggested in Chicot v. Paramount Resources Ltd. et al. was that such a preliminary screening may be administered in a briefer, streamlined form. However, there are a number of reasons why this remedy may create uncertainty. First, in considering a previous assessment, the preliminary screener would have to reconcile the difference between the Review Board’s “likely” test for a development proceeding as opposed to the lower threshold of “might” for the preliminary screener to require a referral to the Review Board. For example, a Review Board’s assessment report may state that a development is not “likely” to have any significant adverse impacts or to be a cause of public concern. The preliminary screener may not be able to take from this that the development “might” not have any significant adverse impacts, particularly since the development was probably referred to the Review Board following a preliminary screening on the basis that it “might” have significant adverse impacts and/or be a cause of public concern.

A second concern is that the Court did not consider the effect of the Ministers’ decision following an environmental assessment. The Minister can decide that a development may proceed notwithstanding it “might” have adverse environmental impacts or be the cause of public concern. In this case, the development is a development that “might” be a cause of adverse environmental impacts and/or be a cause of public concern. Therefore, if a preliminary screening was done on this development it would likely trigger the “might” test in section 125 of the Mackenzie Valley Resource Management Act, and the preliminary screener would have to refer the development to the Review Board for an environmental assessment. In general, how the preliminary screener uses and interprets the decision of the Minister with respect to the “might” test for requiring a referral to the Review Board could be problematic.

Although the solution proposed by the court raises a number of questions, it is reasonable to conduct another preliminary screening when there are changes to a planned development between the assessment and the permitting stage.

Therefore, the Supreme Court of the Northwest Territories’ remedy of a streamlined preliminary screening would not provide any certainty to proponents since a strong possibility would remain that the body conducting the preliminary screening would find the aspect of the development described in the application meets the “might” test for significant adverse impacts or public concern and the entire development, or a portion of it, would have to undergo another environmental assessment.

An amendment of the Mackenzie Valley Resource Management Act was also considered but would require a substantial commitment of resources and time to achieve the same result as the proposed regulatory amendment.

Benefits and costs

The proposed amendments will not result in additional costs as the environmental assessment process will remain unchanged.

Proponents of developments will gain some certainty that the requirement for an authorization in the future, that is required for their development, would not necessarily trigger the requirement for an environmental assessment when an environmental assessment or environmental impact review has already been completed.

It is expected that the Review Board would receive fewer referrals for environmental assessments from regulatory bodies which would result in a reduction of costs related to environmental assessments.

Regulatory bodies may have to develop screening criteria to ensure that the exemption is only applied to applications where there has been no modification of the proposed development in relation to the development that had previously been the subject of an environmental assessment or environmental impact review.

Rationale

The proposed amendments provide the most certainty with regard to determining the requirement for a referral of a proposed development to the Review Board for an environmental assessment.

Amending the Exemption List Regulations rather than amending the Mackenzie Valley Resource Management Act was determined to be the most efficient way to bring about the required change to the assessment process.

Changes in the environment or new information related to the proposed development could still be considered and the development subjected to an assessment when deemed necessary, notwithstanding the exemption from the requirement for a preliminary screening, as the Review Board, the Gwich’in and the Sahtu First Nations, the Tlicho Government, a regulatory authority, a department or agency of the federal or territorial government, or a local government will still be able to make a referral of the development to the Review Board for an environmental assessment.

Consultation

A policy document explaining the items to be addressed in the Regulations was distributed for comments on September 6, 2007, to the Gwich’in Tribal Council, the Sahtu Secretariat Inc., the Tlicho Government, other First Nations and Métis organizations in the Mackenzie Valley, the Government of the Northwest Territories, the Mackenzie Valley Land and Water Board and the Mackenzie Valley Environmental Impact Review Board. These groups were invited to an information session held in Yellowknife on September 27, 2007.

Follow-up discussions have occurred with representatives of the Government of the Northwest Territories, the Tlicho Government, the Gwich’in and Sahtu First Nations and the oil and gas industry.

In response to the policy document, letters were received from the Sahtu Secretariat Inc., the Gwich’in Tribal Council, the North Slave Métis Alliance and Imperial Oil Limited. In general, the views expressed were not supportive of the first set of proposed amendments.

The specific concerns included

• the lack of capacity within First Nations to participate fully in the assessment process;
• the ability of land and water boards to ensure that the activities were fully addressed by an earlier assessment before being exempted from a preliminary screening;
• the lack of consideration of cumulative impacts of a development;
• the lack of time for First Nations to consider impacts of a project;
• no support for streamlining the assessment process;
• that the proposed exemption would not go far enough to ensure that multiple assessments of a development would be avoided;
• that it is inappropriate to exempt a development from a preliminary screening on the basis that the development had been the subject of a previous environmental assessment; and
• that the exemption from a preliminary screening, provided for in the Mackenzie Valley Resource Management Act, must be in relation to a project which is insignificant and unrelated to one which has been the subject of a previous environmental assessment.

The Mackenzie Valley Environmental Impact Review Board and the Mackenzie Valley Land and Water Board generally support the proposed amendments.

With respect to the second set of amendments, there is support for making the amendments with the exception of the North Slave Métis Alliance who did not support proceeding with those changes if they were linked to the first set of amendments.

Implementation, enforcement and service standards

No additional compliance and enforcement mechanisms are necessary for these Regulations, as they continue to be the responsibility of the Mackenzie Valley Environmental Impact Review Board, regulatory authorities, First Nations, the Tlicho Government and responsible ministers in accordance with the Mackenzie Valley Resource Management Act.

Performance measurement and evaluation

The Mackenzie Valley Resource Management Act includes the requirement for a periodic environmental audit. The operation of the Mackenzie Valley Environmental Impact Review Board and Mackenzie Valley Land and Water Board are subject to annual activity reporting requirements.

Stephen Traynor
Director
Resource Policy and Program
Northern Affairs Organization
Indian and Northern Affairs Canada
Gatineau, Quebec
K1A 0H4
Telephone: 819-953-8613
Fax: 819-953-0335
Email: traynors@ainc-inac.gc.ca

Robert Whittingham
Senior Policy Analyst
Resource Policy and Program
Northern Affairs Organization
Indian and Northern Affairs Canada
Gatineau, Quebec
KIA 0H4
Telephone: 819-994-6416
Fax: 819-953-0335
Email: whittinghamb@ainc-inac.gc.ca