Bill C-38 and the new landscape for pipelines in Canada

With the omnibus budget Bill C-38 just surviving a marathon voting session, and set to go to third and final reading in the Commons on Monday and clear the Conservative-dominated Senate by the end of next week, the landscape for energy projects, and pipelines in particular, will soon be fundamentally altered.

Bill C-38 will overhaul environmental legislation, including a dramatic reduction in the number of environmental assessments performed by the federal government, it brings in a two year maximum for completion of assessments, and it will give Cabinet the power to override National Energy Board decisions on big development projects like the proposed Northern Gateway pipeline in B.C.

The opposition is saying the risk of less oversight for pipelines approvals is one of their biggest concerns about Bill C-38, The Globe and Mail reports:

On Wednesday, Green Party Leader Elizabeth May joined the New Democrats and the Liberals at a news conference on Parliament Hill to protest the bill. It featured Bonnie and Gord Johnston of Sundre, Alta., whose 23-hectare farm was contaminated last week when a pipeline broke.

“As the decision makers go forward,” Ms. Johnston said tearfully, “I hope that they will remember that those decisions that they make impact people like us and our community as well.”

And as Marzena Czarnecka writes in Lexpert’s cover story this month, the debate about pipelines will be happening for a long time still:

“My understanding of the position taken by First Nations who oppose this development through their country is that it is unequivocal, and while there may certainly be at some point certain communities who take a different view, there are so many others who are so deeply opposed, I don’t think…that there is room for some sort of compromise to be built,” [Counsel with West Coast Environmental Law Josh] Paterson says.

What does this mean for Gateway? And down south for Keystone? And future pipelines? “What seems clear is that there seems to be a high degree of legal risk attached to this project and this decision,” says Paterson of Gateway. “I think that it is going to face a lot of legal obstacles, which could quite realistically delay and tie it up for many years to go.”

So will it get built? Will Keystone? One thing is certain: in 2012, Canada is, firmly, a hydrocarbon-producing economy in a hydrocarbon-powered world. “Whether we like it or not, we are a country that sells natural resources to other people,” says Shawn Denstedt [a regulatory partner in Osler, Hoskin & Harcourt LLP’s Calgary office].

Pipelines are a way to get some of those natural resources there — including the most coveted and controversial ones. And so long as the world wants Canadian hydrocarbons – and the federal government pushes the efficient export of these as a key part of Canada’s energy and economic policy – proponents will bring projects forward. Regulators will find most of them in the broader public interest. And they will get built.

But no matter how the federal government tinkers with the regulatory process, they will undergo evermore severe public scrutiny, evaluation and opposition.

Building a pipeline will never be boring or routine again.

As lawyers often say, it remains to be seen how these legislative changes will affect how things evolve. In other words, it may still be too early to conclude the pipelines are going to be built any time soon.

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