The stage is set at last for a final regulatory ruling on Canada’s Arctic natural gas production and pipeline project after the federal and Northwest Territories governments kept a promise to remove a lingering obstacle.

Openly pro-development regimes in Ottawa and Yellowknife have set aside, mostly for future consideration at unspecified times, all but 11 of 176 recommendations by an environmental and socio-economic Joint Review Panel (JRP) for conditions to be attached by the National Energy Board (NEB) to approval of the C$16.2 billion (US$15.9 billion) Mackenzie Gas Project (MGP).

The JRP, representing about a dozen Aboriginal and northern agencies, held a marathon of hearings that ran from February 2006 through November 2007, almost a year longer than the NEB’s public sessions. Then the seven-member JRP irritated the industry and the governments alike by taking 25 months to write its report. The bulky document turned out to be a grand design for the northern future rather than a clearly focused review of the production and pipeline project’s direct and adverse effects on the natural and human environment.

In Canada’s highly complex northern governance regime, the JRP and NEB proceedings were in parallel but independent universes. The energy board, as elsewhere in Canada, has the final regulatory say. But on the environmental and socio-economic side, the federal and territorial governments determine what recommendations to pass on to the NEB by a review panel.

The 11 accepted recommendations are technical, tightly focused on the MGP’s measurable immediate effects and foreshadowed by a discussion list of project conditions that the NEB posted during its hearings. The other 165 JRP proposals, mostly described with official political politeness as well intended ideas that are unfortunately just ahead of their time, range over a vast map of issues from Aboriginal-territorial-federal sharing of natural resource revenues to northern health, welfare, education and cultural preservation services.

Although a procedural dispute between Ottawa officials and the JRP prevented the NEB from keeping a promise to complete its ruling in September, the federal cabinet’s northern development committee still hopes to receive the final regulatory decision this fall. In Canada, where regulatory law is different from the U.S., cabinet ratification is required to implement NEB decisions but the politicians can only affirm or reject them and have no authority to make changes. Legal appeals are limited to due-process issues and law courts have no authority to rewrite regulatory rulings.

The NEB’s arctic gas ruling is expected to set off two or more years of negotiations on royalties, taxes and other project finance issues among the federal and territorial governments and MGP sponsors Imperial Oil, Shell Canada, ConocoPhillips Canada, ExxonMobil Canada and the Aboriginal Pipeline Group.

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