Ottawa will exempt some oilsands projects from environmental assessments — if Alberta keeps its emissions cap

Facing criticism from industry over its controversial overhaul of the environmental assessment process, the federal Liberal government released new details Wednesday about which projects will be subjected to greater scrutiny by Ottawa's regulators.

Ottawa is vowing to exempt certain non-mining projects that use steam to extract crude from deep under the earth — known as in-situ projects — as long as Alberta Premier Jason Kenney maintains a hard cap on emissions from his province's oil sector.

Kenney's predecessor, Rachel Notley, vowed to limit emissions from the sector to 100 megatonnes in any given year — a limit the sector currently is in no danger of exceeding.

The federal Liberal government previously cited that cap as a condition for approving the much-delayed Trans Mountain expansion project that will move product from Alberta to B.C.'s coast for export.

Speaking to reporters in Alberta Tuesday, Kenney called the oilsands emissions cap "an academic abstraction" and did not say for certain whether he would keep it in place.

Federal officials, speaking to reporters on background Wednesday about draft regulations to be implemented following the passage of Bill C-69, said in-situ projects would be left off the "project list" — a list of proposed developments that are to receive federal reviews by impact-assessment panels — as long as they are constructed in a jurisdiction with an emissions cap.

In-situ extraction projects, like the one at Cenovus Energy's Christina Lake operation, generally have a much smaller environmental footprint and use considerably less water than open-pit oilsands mining projects. They also don't rely on tailings ponds to collect waste.

Mining projects with bitumen production capacity will see no change, officials said, and likely will be subjected to federal reviews, as they are now.

The Canadian Association of Petroleum Producers (CAPP) and other industry groups were anxious about the risk of regulatory creep and the prospect of Ottawa applying its jurisdiction to projects that, to date, have operated largely under provincial jurisdiction.

'Political brinksmanship'

In an interview with CBC News, Tim McMillan, the president of CAPP, said the draft regulations bring him no comfort as he wanted to see in-situ projects left off the list entirely and not subjected to the condition that they'll be free from federal oversight only as long as Kenney keeps the cap.

"Today's project list, I think, makes it worse not better. It clouds the whole process," he said.

"We see regulations that reaffirm our fear that there will be politicization, which we absolutely do not want. I think there is some political brinksmanship at play here when it should be regulator excellence at play."

He said assessing those types of oilsands projects should be the sole domain of the Alberta Energy Regulator. "Unfortunately, today, there's a caveat that doesn't seem to be based on having the best positioned, most experienced regulator. There should be no caveat or asterisk," he said, referring to the emissions cap provision.

"The Alberta Energy Regulator was there when the [in-situ] technology was developed. They've been through the entire life cycle of its implementation and improvement ... the federal level doesn't have that depth of experience or talent."

Federal officials said the project list would be reserved largely for proposed developments that are nationally significant, and those that have "the greatest potential for adverse environmental effects in areas of federal jurisdiction."

However, federal environment ministers do retain the right to put any project on the list if they feel it warrants more regulatory scrutiny from the feds. The environmental effects of projects that are not being added to the project list would continue to be addressed by other regulatory regimes, the officials said.

The government also clarified which pipeline projects will be placed on the project list: only international or interprovincial oil and gas pipelines with a length of 75 kilometres or more, along new rights-of-way or routes, will go through Ottawa's assessment process.

So a future project like the Trans Mountain expansion, which crosses the Alberta-B.C. border and is built in part over new land, would be put on the list, while those like the Coastal GasLink pipeline — which will connect B.C.'s gas fields to an export terminal on the province's coast — would not.

The nuclear industry also received some clarity Wednesday from the new draft regulations. Officials stated that small modular nuclear reactors, built on existing nuclear facility sites, will not be placed automatically on the project list.

Small modular reactors, or SMRs, are nuclear fission reactors that are much smaller than conventional reactors and can use carbon as a neutron moderator.

'Flabbergasted'

Stephen Hazell, director of policy at Nature Canada, said he was "flabbergasted" by the pipeline regulations and said his group will rethink its support for Bill C-69.

"I'm really shocked ... What they're doing with this list is promoting the fossil fuels industry at the expense of the renewables industry. They're decreasing thresholds on pipelines, on coal mines," he said.

"At the same time, there will be federal assessments on wind energy projects that have more than 10 turbines. It's just astonishing."

Bill C-69, the government's environmental assessment overhaul, is currently before the Senate. It has faced intense criticism over how much authority it gives the environment minister to suspend an assessment or extend timelines.

In response to such concerns, the federal government said Wednesday there will be regulations to strictly govern those timelines.

The officials said that a suspension of timelines would only come for "proponent-driven reasons" — if a company needs more time for design work or for financial reasons, for example.

The minister can only extend "decision-making timelines" once, for a period no longer than 90 days. The minister would have to publicly state why the government is requesting an extension, and any further delays would have to be approved by the entire cabinet.

Natural resources industries also have criticized the federal government's plan to do away with the "standing test" used by regulators like the National Energy Board to decide who can testify at its public hearings.

The federal Liberal government has said it believes this change, which is included in Bill C-69, will make the process more democratic and participatory.

Right now, only people who are directly affected by a project — local communities or nearby Indigenous groups, for example — or those with expert information are allowed to testify. The new law would open the process up to virtually anyone who wants to appear.

Industry associations say they worry the relatively lax rules will subject project hearings to unreasonable interference by activists, and protracted legal actions over who can speak. They say the regulator should have the discretion to decide who participates.

Officials said that the federal government is working on a "public participation plan" that will help govern these hearings. While they're light on specifics, officials said the plan will ensure openness.

"Developed through consultations during early planning, the Public Participation Plan would provide the public with an opportunity to meaningfully participate, and would outline various ways to provide input and different levels of engagement, including for those directly affected by the project," a background document supplied by the government says.