Industry faces new rules for project reviews
New law aims to balance opposing views of business and environmental groups
The federal government is designating a single agency to oversee what is expected to be a more stringent and far-reaching review process, amid concerns Canada is burdening the industry with new and untested layers of regulations.
Environment Minister Catherine McKenna told reporters Thursday the new law would create a “predictable, timely and evidencebased” review process for major projects like mines, hydroelectric facilities and oil pipelines. It also aims to impose a more comprehensive, or “impact-based,” measure of whether project proponents have sufficiently consulted with local communities and can mitigate climate change risks caused by their developments.
The overhaul comes as the federal government attempts to balance the sharply opposing views of Canada’s business and environmental communities, which have voiced discontent over how resource developments and big infrastructure projects are reviewed.
“Canadians are concerned that decisions were made on politics, not science, and views of Indigenous people were ignored,” McKenna said.
Government officials have been consulting with businesses, nongovernment organizations and First Nations groups for the past 14 months over the changes.
Under the legislation, major project reviews will now be headed by the Impact Assessment Agency of Canada (IAAC), which will replace the Canadian Environmental Assessment Agency. The National Energy Board will be renamed the Canadian Energy Regulator (CER), and will provide recommendations to the agency on big projects subject to a joint review panel. The change would reverse legislation passed by the former Harper government in 2012, which transferred assessment of pipelines to the National Energy Board and nuclear projects to the Canadian Nuclear Safety Commission.
The federal government is also planning to reduce legislated timelines for impact assessments, which were last set by the Harper government in 2012. Those led by the impact assessment agency would be reduced to a maximum of 300 days, from 365, while major projects led by a review panel would have a maximum of 600 days, down from 720. It will also add an “early planning phase” of 180 days before the impact assessment begins, effectively stretching out overall timelines.
The long-awaited legislation comes after years of political wrangling over major pipelines projects, causing Canadian oil export capacity to become constrained.
While the focus on more comprehensive environmental impacts is a positive, the industry is concerned that the new legislated timelines won’t be enforced rigidly enough.
“We’re already losing a tremendous amount of value in our exports today,” Chris Bloomer, the president and CEO of the Canadian Energy Pipeline Association, said at an energy event in Ottawa on Monday.
The spread between Canadian oil and U.S. benchmarks recently has widened to the largest in years, creating substantial discounts for Canadian petroleum products. On Thursday, Western Canada Select was selling at a US$28 discount to West Texas Intermediate, the main U.S. benchmark.
Pierre Gratton, the president and CEO of the Mining Association of Canada, said they were still digesting the finer details of the legislation. But he said there is uncertainty around how the agency will determine whether the early planning stage of the consultation has been completed, and to what degree extensions can be put in place. “The timeline question is not clear,” he said.
Sergio Marchi, the president and CEO of the Canadian Electricity Association, said it supports having a central agency overseeing project reviews, which could lead to more “balanced and pragmatic” decisions on large-scale developments.
“We think this will transform it into a more modern, efficient decision making body,” Marchi said, noting that the new framework would reduce some of the jurisdictional overlap between the former NEB and the provincial energy regulators.
The decision to overhaul the current regulatory acts fulfils a central recommendation from environmental groups. In an August 2017 letter to the federal energy and environment ministers, a coalition warned that “tinkering with the current law is simply not acceptable to any of us.”
It also said that the National Energy Board, Canadian Nuclear Safety Commission and offshore oil and gas boards should “have no authority to conduct impact assessments or appoint representatives to joint panel reviews.”
The reforms also require climate change considerations to be “systematically integrated throughout the assessment process,” with the environment department providing guidelines to “ensure Canada’s action on climate change is reinforced.”
It remains unclear which specific projects will be subject to the new review process. The recommendation was to retain the current list of projects, but the government is currently in consultations over whether the list will be expanded.
Kinder Morgan Canada Ltd., the company proposing expansion of the controversial Trans Mountain pipeline between Alberta and British Columbia, was up more than one per cent to $17.32 in Toronto in a broadly negative market. The new rules will not affect the pipeline which has already secured federal approval but faces massive opposition from local communities.