Federal budget proposals aim to streamline resources regulatory system

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The Joslyn oil sands mine has not been built. It is, for now, little more than a well-engineered idea – and an expensive one, with an estimated price tag of $9-billion.

But Joslyn, backed by French giant Total SA and Calgary-based Suncor Energy Inc., has emerged as much more than another huge Alberta project. It has also become a symbol for what is wrong with Canada's regulatory system – the system that, Natural Resources Minister Joe Oliver has often noted, took six years to grant Joslyn its blessing.

The Joslyn experience is about to have direct consequences: Mr. Oliver has made clear that Thursday's federal budget will offer a raft of changes aimed at streamlining the regulatory system.

Never mind that critics say the system worked just fine with Joslyn, and that it didn't really take six years. Project changes by Total, for example, consumed 18 months, and it took the federal cabinet nearly a year to give it the final go-ahead.

"The biggest delays in the regulatory process come because companies change their plans, or the government fails to meet its own regulatory obligations and is challenged by intervenors," said Simon Dyer, policy director at the Pembina Institute, which has participated in many oil sands reviews.

"If you look at the minister's speeches, it seems he is trying to paint the picture of a problem that doesn't really exist," he said.

Industry has a different view. Industry sources say both Total and Royal Dutch Shell PLC, which is winding its way through a lengthy process for expansion of its Jackpine mine in Alberta, have been subject to reviews that have dragged on because of government and regulatory inaction. During that time, environmental rules have changed, forcing companies to redo their projects, creating further delays.

The current system creates "perpetual assessments" that "really are Alice in Wonderland-like," said Shawn Denstedt, a lawyer with Osler, Hoskin & Harcourt LLP who has substantial experience in regulatory reviews. "It doesn't protect the environment, it doesn't help the economy, and it doesn't help the social fabric of the country. It's busted."

Earlier this week, Mr. Oliver rejected a suggestion he intends to "gut" environmental rules, saying, "We will ensure that no project goes ahead if it isn't safe for Canadians and safe for the environment."

But industry is looking for a number of changes that could dramatically change the way Canada examines the environmental impacts of energy and mining projects. These include:

• Changes to the Fisheries Act, to allow some pollution of rivers, within set boundaries, by all mines. Currently only hard-rock mines may release deleterious substances into fish-bearing waters. A change would allow oil sands and diamond mines to do the same.

• New language in the Canadian Environmental Assessment Act providing more guidance on how first nations are to be consulted and accommodated.

• Designation of a single agency to lead environmental assessments. This could mean handing over full assessment power on pipelines to the National Energy Board, for example (currently, the Canadian Environmental Assessment Agency also plays a role). It could also mean giving provinces the lead in reviews of projects largely inside provincial borders.

• Fewer requirements for environmental assessments. Currently, even minor internal changes at a nuclear plant trigger a “pro forma” requirement for a lengthy assessment. Knocking down that requirement could smooth the path for smaller upgrades.

• Fewer inspectors. This could mean training pipeline inspectors to monitor impacts on fisheries, navigable waters and migratory birds, rather than having separate inspectors from different agencies examine those.

• Diminished fish habitat replacement. Under current rules, companies that impact one hectare of fish habitat must replace it with two new hectares. That requirement could be dropped in cases where the disturbed fish aren’t commercially or culturally important.