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Canada Widens Scope of Project Approvals Despite Oil Company Ire

June 21, 2019, 2:30 PM

A broad range of social, economic, and health impacts will become part of the federal permitting plan for major industrial, transportation, and energy projects in Canada under a bill Parliament approved.

Bill C-69 passed Canada’s Senate June 20, and Governor General Julie Payette will soon approve the bill into law.

The bill will transform the federal system from one that focuses purely on negative environmental effects to one that will examine the broader effects of a project, including whether a project advances sustainability.

It also will introduce new timelines for permitting and measures to account for the cumulative impacts of several adjacent projects on the environment, and will require federal ministers to publish reasons why a project is rejected or approved.

“With hundreds of major resource projects—worth over $500 billion [U.S. $377 billion] in investment—planned across Canada in the decade ahead, it’s important we get this right,” Environment and Climate Change Minister Catherine McKenna said in a statement June 20.

“That’s why we’ve worked hard since day one to restore public trust in how decisions about resource development and other major projects are made,” McKenna said.

Sectors’ Stakes

The bill, which Prime Minister Justin Trudeau promised during the last election campaign, galvanized opposition among oil and gas companies, in particular pipeline companies, which said it would slow the permitting process with lawsuits and new regulatory tests.

The projects covered by the federal permitting regime include large oil and gas operations, mines, hydroelectric plants, tidal power sites, nuclear facilities, offshore wind farms, marine terminals, dykes, canals, highways, railways, airports, hazardous waste facilities, as well as international and interprovincial powerlines, pipelines and bridges.

Oil and gas pipeline companies said no interprovincial project will be able to win approval under the conditions outlined in Bill C-69, while mining companies, on the other hand, lauded the bill as a improvement over the current system

Alberta, which produces 80% of Canada’s oil, has promised a court challenge of the bill, arguing it treads into provincial jurisdiction. Provincial Premier Jason Kenney, who won an election in part in April by campaigning against federal environmental policies, criticized Ottawa for passing the bill without deep amendments.

“A bad day for our economy, and the Canadian federation,” Kenney said on social media June 21.

Canada’s economy relies heavily on resource projects compared to other wealthy economies.

Petroleum and electricity generated around C$213 billion in gross domestic product in 2017 and metal mining sector production hit C$24 billion that same year.

Around 400 oil, gas, and mining projects with a combined value of almost C$585 billion are either underway or planned during the next decade, Natural Resources Minister Amarjeet Sohi said.

Major Makeover for Agencies

C-69 will transform two major regulatory bodies.

The National Energy Board, based in Calgary, will become the Canadian Energy Regulator and the Canadian Environmental Assessment Agency, situated in Ottawa, will become the Impact Assessment Agency.

The Canadian Energy Regulator will have less authority to design assessments compared to its predecessor, while the Impact Assessment Agency will gain sway.

The bodies will have to respect 300-day and 600-day deadlines for average and large assessments, respectively, but there are clauses in the bill allowing extensions.

Project reviews will have to consider Canada’s climate change obligations, but downstream greenhouse gas emissions, like the exhaust from a car, wouldn’t be included in a review in an oil extraction or pipeline project, according to Environment and Climate Change.

C-69 also creates a new early-planning phase to encourage dialogue between project proponents and affected communities.

Indigenous Support

Environmental law groups say the C-69 bill is an improvement over the current regime but still falls far short of safeguarding ecological integrity, upholding indigenous rights, and ensuring equitably distributed economic well-being.

Indigenous communities, who under Canadian law must be consulted about and accommodated for impacts on their lands, also see the bill largely as an improvement, despite reservations about the centralization of power at the federal Cabinet.

The bill recognizes the United Nations’ Declaration on the Rights of Indigenous Peoples and require projects reviews to use indigenous knowledge systems, as well as impact assessment by indigenous governments if they have been created.

McKenna, the federal environment minister, rejected 130 of the 229 proposed amendments to the bill that the Senate made in recent weeks, accepting or amending the rest.

The bill was changed to allow a regulatory agency to extend deadlines instead of the environment minister, to make clear the minister can’t direct the head of an agency, to allow for the prioritization of factors studied during an assessments, and to make sure the projects with the most impacts get the most scrutiny, McKenna told the House of Commons on June 12.

Oil and gas companies unsuccessfully asked Ottawa to retain existing restrictions on who can submit information during a review to ensure protection of the process from legal challenges and to put more power into the hands of the regulatory agencies that monitor projects throughout their lifetime rather than those that manage the approval process.

The bill’s passage through Parliament comes after several tough years for Canadian resource projects.

Total planned investment in major resource projects dropped from C$711.7 billion in 2015 to C$584.9 billion last year, according to the C.D. Howe Institute think tank.

The Canadian Association of Petroleum Producers and the Canadian Energy Pipeline Association weren’t able to provide immediate comment.

To contact the reporter on this story: James Munson in Toronto at correspondents@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Jean Fogarty at jfogarty@bloombergenvironment.com; Rob Tricchinelli at rtricchinelli@bloombergenvironment.com

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