The worst possible time to blow up the regulators
The federal government’s $4.5-billion purchase of the Trans Mountain pipeline from Kinder Morgan Canada was meant to overcome political uncertainty.
The Federal Court of Appeal’s recent decision overturning the approval for the pipeline’s expansion has significantly changed the economic and political calculus.
Alberta Premier Notley has announced that until the project is put back on track, her province no longer intends to participate in the federal climate plan.
She declared that any climate change plan must be “paired with very intentional efforts to build our economy, to create jobs and to support Alberta” — meaning a completed pipeline.
Firmly placing the bell on the federal cat, she insisted that: “… the federal government is going to have to use its legislative authority to speed the process along.”
Many legal and regulatory experts have voiced concerns that Canada’s overlapping environmental regulatory processes have become so complex that, even with the direct participation of governments, the hurdles cannot be overcome.
Like the Northern Gateway pipeline proposal, the now-nationalized Trans Mountain project passed every regulatory test attributable to the proponent. The regulatory failings identified by the courts have consistently originated not with proponents, but with agencies of the federal government.
In a classic example of the cure being worse than the disease, this intolerable circumstance is about to be made worse through the introduction of Bill C-69, which is expected to be debated by the Senate this month. The bill proposes, at the worst possible time, a massive regulatory change for the now seriously compromised Trans Mountain pipeline expansion.
At this juncture, the federal government should quickly disabuse itself of any notion that passage of Bill C-69 might constitute a solution to its problems with the Trans Mountain process, or any future resource development applications. Indeed, the proposed act would, at huge cost, disrupt and seriously exacerbate the current regulatory process at a time when institutional stability is central to the Canadian national interest.
Continued regulatory chaos compromises Canadian competitiveness and risks further damage to Canada’s international reputation for capital investment.
Senior Canadian financial experts have repeatedly called attention to the accelerating capital exodus from Canada.
Imperial Oil chairman Rich Kruger recently described the Canadian energy sector as being surrounded by a “cloud of uncertainty.”
The recent appeals court decision has transformed that cloud into a storm.
Meanwhile, costly Canadian oil exports by rail have reached record levels with heavy oil producers projected to lose an estimated $15.8 billion this year alone in forgone revenues. This constitutes a loss of 0.7 per cent to the Canadian GDP.
It would be irresponsible for the government, in the midst of this economic, regulatory and legal chaos, to proceed with passage of the seriously flawed Bill C-69 to establish a new Canadian Energy Regulator and a new Impact Assessment Agency.
Aside from the disruption this would cause in the midst of what has developed into a national economic and leadership crisis, Bill C-69 promises to deliver an untested, uncertain and far more complex regulatory process for all federally permitted resource projects. Worse, the legislation allows Cabinet the discretion to choose among major projects at the end of costly and increasingly undefined assessments.
Canada has already seen the consequences of major regulatory disruption with the Energy East debacle.
We can choose to make incremental improvements to the existing regulators — or risk another significant regulatory disruption.
Just prior to the recent Federal Court of Appeal decision on Trans Mountain, Martha Hall Findlay, president of the Canada West Foundation, argued convincingly that Bill C-69 “needs a reboot”: “Now is not the time to pass legislation that could make our investment climate even worse,” she said. Instead, she offered a sensible solution: that “... the government recognize that, due to forces beyond its control, it needs a new mandate to focus on economic issues, with a new Throne Speech in the fall.
A side benefit would be the opportunity for the government to re-boot C-69 in the new session with a better bill.”
Canada cannot now afford the distractive, highminded legislative experiments characterized by Bill C-69. At a time of cascading urgent economic and political necessities, the Senate should stop this bill in its tracks and advise the government to focus first on resolving long-standing problems of its own creation and that it put aside process discussions and deal with increasingly serious challenges to Canada’s economy.
If Bill C-69 is what achieving the government’s socalled “balance” between the environment and the economy looks like, Canadians would be right to be suspicious that they’re being led down the kind of pathways that have led to the precipitous decline of other onceprosperous nations.
BILL C-69 PROMISES TO DELIVER AN UNTESTED, UNCERTAIN AND FAR MORE COMPLEX PROCESS.