Sweeping regulatory reform looms over resource sector, evoking NWT pipeline’s fate

– Conservative MP Robert Sopuck to Environment minister Catherine McKenna during last year’s committee deliberations on Bill C-69

The old saying ‘when you try to please everybody, you end up pleasing no one’ should’ve been the moral to the story of Mackenzie Gas Project’s tragic demise, after the $16-billion gas pipeline from Beaufort Sea to Alberta was officially shelved in December 2017.

When hearings began for the project in 2006, confidence was high – the Aboriginal Pipeline Group were players in the proponent consortium that included Imperial, ConocoPhillips and Shell, ensuring Indigenous ownership and jobs.

Due to the project’s right-of-way – through settled and unsettled land claim regions and a patchwork of local review boards – Ottawa created the Joint Review Panel to conduct socioeconomic and environmental hearings, to coincide with National Energy Board proceedings.

The hearings were supposed to run for a year and consider everyone’s concerns from youth to elders and a host of Sierra Club environmentalists from down south, but the witness logjam, compounded by lawsuits and waning proponent confidence delayed regulatory machinations significantly.

In the end it took four years for the MGP to finally get the green light but by then, the price of natural gas had slumped and project costs skyrocketted – the energy world had moved on.

Enter the federal government’s proposed Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act. While Environment minister Catherine McKenna promises it offers greater certainty and streamlines the regulatory regime, it actually combines the worst elements of the MGP process – trying to please everybody – and shoehorns them right into the legislation.

Since the MGP was abandoned, Northern Gateway and Energy East pipelines have also been scrapped over insufficient consultation and lack of political will. This leaves TransMountain as the last shovel-ready project on the table to get Alberta’s bitumen to tidewater. Despite assurances from the federal government who last year purchased its existing infrastructure for $4.5 billion from Kinder Morgan, construction for twinning the line remains in limbo.

Meanwhile, Bill C-69 will turn a vital piece of country’s regulatory regime that evaluates such mega-projects on its head.

As things stand today, any interprovincial or international energy proposals – pipelines, transmission lines and the like – fall under the National Energy Board’s purview. All that is required to move a review process forward is making an application with the board. At this stage, the NEB reviews the proposal and in the case of mega-pipelines, this is guaranteed to trigger one or more environmental assessments via the Canadian Environmental Assessment Act.

The NEB then weighs such assessments against economic benefits, considers input from affected entities and approves or denies the project, decisions for which federal cabinet remains the ultimate arbiter. These processes already take years to reach a determination as MGP and Northern Gateway have shown.

Under McKenna’s Bill C-69 regime, however, the Environment minister becomes the gatekeeper with power to quash project proposals deemed not in the public’s interest. Her bill transplants vetting this public interest from the Calgary-based National Energy Board to an Ottawa body dubbed the Impact Assessment Agency.

Essentially, this makes the energy board’s role subservient to ministerial whims, instead of how it operates today: in concert with the Canadian Environmental Assessment Agency to provide cabinet with informed recommendations.

McKenna claims her regulatory revamp will increase public confidence, but in doing so belies the assessment agency’s longstanding ability to marshal requisite expertise, in its own words “from federal departments and agencies, provinces and territories, Indigenous groups, environmental organizations, industry and others to deliver high-quality EAs.”

The bill also opens the door for virtually anyone to appear at a project hearing, if it ever gets to that stage, by tossing a “standing test” for who can give testimony – currently only those directly affected or with expertise are allowed to participate. Such ‘open door’ policies contributed to the Mackenzie Gas Project’s death; while the NEB could limit participants, the Joint Review Panel became a dog’s breakfast of witnesses, ultimately delaying its final report.

So with these concerns in mind, expressed scores of times by industry and MPs during parliamentary hearings on the legislation, the Senate’s Environment committee decided to go on a cross-country tour to hear directly from Canadians who would be impacted.

Earlier this month in Calgary, senators were greeted by pro-energy protestors demanding they ‘kill the bill’ while in Winnipeg on April 12, a different set of demonstrators called on the Senate to pass the legislation as is, and accused senators of stalling.

This Friday, the Senate committee’s tour wraps up in Québec City, location of the proposed $7.5 billion Energie Saguenay’s natural gas liquifier and export facility, currently under scrutiny by the National Energy Board and Canadian Environmental Assessment Agency.

If the Senate passes Bill C-69 as is, an additional “upstream greenhouse gas analysis” criterion will count emissions related, end-use of LNG produced by Energie Saguenay and any other future resource project’s energy commodity as part of their overall environmental footprint.