Raised regulatory hurdles and expanded roles for critics confront the Canadian fossil fuel industry under hotly contested legislation that the national Liberal government passed in the final hours of the 2019 session of Parliament.
The new Impact Assessment Act widens project reviews beyond the physical realm of environmental effects on land, air, water and wildlife and into social issues including health, “sustainability,” climate change, women’s rights and aboriginal participation.
The act also overhauls Canada’s federal regulatory apparatus. The National Energy Board (NEB) will be reorganized and renamed the Canadian Energy Regulator (CER). The Canadian Environmental Assessment Agency (CEAA) will grow into the Impact Assessment Agency of Canada (IAAC) and take command of the new regime.
The agencies’ reform mandate includes relaxing court-like “standing” rules that have to date restricted status as formal regulatory process interveners to landowners and groups that are directly affected by projects or demonstrate expertise.
Practical meanings of the legislative provisions remain to be fleshed out by regulations that the agencies, federal cabinet and government departments are drafting, with no deadlines set for completing the complicated job.
However, the Canadian Energy Pipeline Association (CEPA) identified its members, led by TC Energy and Enbridge Inc., as clearly the first and worst casualties of the new regulatory regime.
Oil and gas shippers agreed, nicknaming the Liberal legislation “the no more pipelines bill.” Enacting the new regime over objections by the industry and governments in the fossil fuel-producing provinces means “the potential for new major pipeline development in Canada is bleak,” said the CEPA.
The Liberal legislation became a regional irritant, especially in the West but also in oil-producing Newfoundland, by coinciding with a Canadian industry slump blamed on pipeline capacity shortages and stalled addition plans as well as soft oil and gas prices.
“While approval of the Trans Mountain expansion project will allow more Canadian oil to reach tidewater, it is only part of the solution,” CEPA President Chris Bloomer said. “We desperately need more investment. We will need new projects. However, Canada is sending mixed messages that will send critical investment capital elsewhere.”
The C$9 billion ($6.8 billion) tripling of Trans Mountain’s capacity to 890,00 b/d is not affected by the new regulatory regime. Also exempt are projects already going through the previous process, led by a C$6.7 billion ($5 billion) package of additions to TC Energy’s Nova Gas Transmission Ltd. (NGTL) supply collection grid in Alberta and British Columbia.
As a northern counterpart to the Green New Deal proposed in the United States by the left wing of the Democratic Party, the Impact Assessment Act emerged as an issue in the budding campaigns of the Canadian federal election scheduled for this fall.
Conservative leader Andrew Scheer vowed to repeal the legislation if his party wins.
“This is a sad day for Canada,” he said. Prime Minister Justin Trudeau “finally has his law that will phase out Canada’s oil and gas industry.”
The impact act sponsor, Liberal Environment Minister Catherine McKenna, said, “I'm really proud of this legislation. It's going to be great for investor confidence in our country to know we have a system that works. If you do not respect the rights of indigenous peoples, if you do not protect the environment, if you do not listen to concerns, good projects simply will not go ahead."